190.Strongsville College recently leased a photocopy machine for $2,000 per month plus $0.06 per copy. Strongsville...

190.Strongsville College recently leased a photocopy machine for $2,000 per month plus $0.06 per copy. Strongsville estimated it would produce 30,000 copies per month. The Arts Department estimated its usage as 6,000 copies, but it used only 4,000 copies. If fixed and variable cost pools are allocated separately, then the amount of fixed costs allocated to the Arts Department should be:

Select one:

a. $200.

b. $400.

c. $240.

d. $360.

Expert Solution

Answer:

Percent of Estimated Capacity
                = Department Estimation / college estimation
                =   6,000 / 30,000 Copies
                =   20%

Amount of fixed costs allocated to the Arts Department
                  =   Budgeted Fixed cost x Percent of Estimated Capacity
                  =      $2,000 x 20%
                  =   $400

Amount of fixed costs allocated to the Arts Department = $400

Option (b) is correct - $400

ekkarill92 answered 2 years ago

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