(CMA)The printing department supplies copy and printing support for both Departments A and B and has prepared its total budget using the following information for next year: Fixed costs $100,000
Available capacity 4,000,000 pages
Budgeted usage:
Department A 1,200,000 pages
Department B 2,400,000 pages
Variable cost $0.03 per page
Assume that the single rate method of cost allocation is used and the allocation base is budgeted usage. How much photocopying cost will be allocated to Department B using budgeted costs and usage?
A)$72,000
B)$122,000
C)$132,000
D)$138,667

Question

Quizplus · Accepted Answer

The total budgeted cost is $100,000 (fixed) + (4,000,000 pages x $0.03 per page) = $132,000. The allocation rate is $132,000 / 4,000,000 pages = $0.033 per page. The photocopying cost allocated to Department B is 2,400,000 pages x $0.033 per page = $79,200.

(CMA)The Printing Department Supplies Copy and Printing Support for Both