The Charmatz Corporation has a central copying facility. The copying facility ha
ID: 2481140 • Letter: T
Question
The Charmatz 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: Practical capacity 600,000 copies Fixed costs per year $60,000 Variable costs 3 cents (.03) per copy Budgeted long-run usage in copies per year: Marketing Department 120,000 copies Operations Department 380,000 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. Find the allocation to the Marketing department under the following assumptions: Single-rate and demand-based Single-rate and supply-based Dual-rate and demand-based Dual-rate and supply-based What is the cost of unused capacity under the supply-based allocation?Explanation / Answer
Workings
Demand Based Supply based All Cost All Cost Single rate 0.15 0.13 Cost Allocated 80000 Units 12000 10400 Fixed Costs Variable Cost Fixed Costs Variable Cost Dual Rate 0.12 0.03 0.1 0.03 Cost Allocated 80000 Units 9600 2400 8000 2400