Question :
21) If a dual-rate cost-allocation method used, what amount of : 1216994
21) If a dual-rate cost-allocation method is used, what amount of cost will be allocated to the Night Light Division? Assume budgeted usage is used to allocate fixed operating costs and actual usage is used to allocate variable operating costs.
A) $375,000
B) $435,000
C) $390,000
D) $450,000
22) The dual cost-allocation method classifies costs into two pools, a budgeted cost pool and an actual cost pool.
23) The dual-rate method makes no distinction between fixed and variable costs.
24) Using the single-rate method transforms the fixed costs per hour into a variable cost to users of that facility.
25) The dual-rate cost-allocation method provides better information for decision making than the single-rate method.
26) An advantage of the single-rate method is that it is easier and always the most accurate cost-allocation choice.
27) The fixed costs of operating the maintenance facility of General Hospital are $4,500,000 annually. Variable costs are incurred at the rate of $30 per maintenance-hour. The facility averages 40,000 maintenance-hours a year. Budgeted and actual hours per user for 20X3 are as follows:
Budgeted hoursActual hours
Building and grounds10,00012,000
Operating and emergency8,0008,000
Patient care21,00022,000
Administration1,0001,200
Total40,00043,200
Assume that budgeted maintenance-hours are used to calculate the allocation rates.
Required:
a.If a single-rate cost-allocation method is used, what amount of maintenance cost will be budgeted for each department?
b.If a single-rate cost-allocation method is used, what amount of maintenance cost will be allocated to each department based on actual usage?
c.If a dual-rate cost-allocation method is used, what amount of maintenance cost will be budgeted for each department?
d.If a dual-rate cost-allocation method is used, what amount of maintenance cost will be allocated to each department based on actual usage? Based on budgeted usage for fixed operating costs and actual usage for variable operating costs?
28) The Alex Miller Corporation operates one central plant that has two divisions, the Flashlight Division and the Night Light Division. The following data apply to the coming budget year:
Budgeted costs of the operating the plant
for 10,000 to 20,000 hours:
Fixed operating costs per year$240,000
Variable operating costs$10per hour
Practical capacity20,000hours per year
Budgeted long-run usage per year:
Lamp Division800 hours × 12 months =9,600hours per year
Flashlight Division450 hours × 12 months =5,400hours per year
Assume that practical capacity is used to calculate the allocation rates. Further assume that actual usage of the Lamp Division was 700 hours and the Flashlight Division was 400 hours for the month of June.
Required:
a.If a single-rate cost-allocation method is used, what amount of operating costs will be budgeted for the Lamp Division each month? For the Flashlight Division each month?
b.For the month of June, if a single-rate cost-allocation method is used, what amount of cost will be allocated to the Lamp Division? To the Flashlight Division? Assume actual usage is used to allocate operating costs.
c.If a dual-rate cost-allocation method is used, what amount of operating costs will be budgeted for the Lamp Division each month? For the Flashlight Division each month?
d.For the month of June, if a dual-rate cost-allocation method is used, what amount of cost will be allocated to the Lamp Division? To the Flashlight Division? Assume budgeted usage is used to allocate fixed operating costs and actual usage is used to allocate variable operating costs.
