The Document Creation Center (DCC) for Arlington Corp. provides photocopying and document services for three departments in the Minneapolis office. The following budget has been prepared for the year.
$\begin{array}{lr}
\text { Available capacity } & 8,000,000 \text { pages } \
\text { Budgeted usage: } & \
\text { Software Development } & 1,600,00 \text { pages } \
\text { Training } & 3,000,00 \text { pages } \
\text { Management } & 2,400,000 \text { pages } \
\text { Cost equation } & \$ 280,000+\$ 0.03 \text { per page }
\end{array}$
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If DCC uses a dual-rate for allocating its costs based on usage, how much cost will be allocated to the Training Department?
A) $183,750.
B) $210,000.
C) $195,000.
D) $222,857.

Question

Quizplus · Accepted Answer

The fixed cost is allocated based on budgeted usage, and the variable cost is allocated based on actual usage. Fixed cost per page = $280,000 / 8,000,000 = $0.035. Training's fixed cost = 3,000,000 * $0.035 = $105,000. Variable cost per page = $0.03. Training's variable cost = 3,000,000 * $0.03 = $90,000. Total cost = $105,000 + $90,000 = $195,000.

The Document Creation Center (DCC) for Arlington Corp - If DCC Uses a Dual-Rate for Allocating Its Costs

The Document Creation Center (DCC) for Arlington Corp -
If DCC Uses a Dual-Rate for Allocating Its Costs