Question

The Crantz Corporation has a central copying facility. The copying facility has only two users, the Marketing Department and the Operations Department. The following data apply to the coming budget year:
Budgeted costs of operating the copying facility
for 400,000 to 600,000 copies:
Fixed costs per year$60,000
Variable costs3 cents (.03) per copy
Budgeted long-run usage in copies per year:
Marketing Department120,000 copies
Operations Department380,000 copies
Budgeted amounts are used to calculate the allocation rates.
Actual usage for the year by the Marketing Department was 80,000 copies and by the Operations Department was 360,000 copies.
If a single-rate cost-allocation method is used, what amount of copying facility costs will be budgeted for the Marketing Department?

A. $18,000

B. $3,600

C. $14,400

D.$16,800

Answer 1

• All working forms part of the answer
• Working

A	Total Fixed Cost	$           60,000.00
	Total Budgeted units:
	Marketing Department	120,000
	Operations Department	380,000
B	Total units	500,000
C = A/B	Fixed cost per copy	$                     0.12
D	Variable cost per copy	$                     0.03
E = C+D	Single Rate Cost allocation rate	$                     0.15
F	Copies Budgeted for Marketing Department	$        120,000.00
G = E x F	Copying Facility Cost Budgeted for Marketing Department	$           18,000.00 = Answer

• Correct Answer = Option ‘A’ $ 18,000