Answer the following questions using the information below:
The Laserlight 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 operating the plant for 2,000 to 3,000 hours:
Budgeted long-run usage per year:
Assume that practical capacity is used to calculate the allocation rates.
Actual usage for the year by the Flashlight Division was 1,400 hours and by the Night Light Division was 600 hours.
-If a single-rate cost-allocation method is used, what amount of operating costs will be budgeted for the Flashlight Division?
A)$1,500,000
B)$1,560,000
C)$1,140,000
D)$1,410,000

Question

Answer the following questions using the information below:
The Laserlight 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 operating the plant for 2,000 to 3,000 hours:
  Budgeted long-run usage per year:
  Assume that practical capacity is used to calculate the allocation rates.
Actual usage for the year by the Flashlight Division was 1,400 hours and by the Night Light Division was 600 hours.
-If a single-rate cost-allocation method is used, what amount of operating costs will be budgeted for the Flashlight Division?
A)$1,500,000 
B)$1,560,000 
C)$1,140,000 
D)$1,410,000

Quizplus · Accepted Answer

The single-rate cost-allocation method allocates costs based on a single cost driver. Without additional information on the cost driver or allocation base, the budgeted operating costs for the Flashlight Division are assumed to be $1,500,000 as per the given options.

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