If the Copy Department uses a dual-rate for allocating its costs,how much cost will be allocated to the Marketing Department,assuming the Marketing Department actually made 3,000,000 copies during the year?
A)$135,000
B)$150,000
C)$155,000
D)$170,000

Question

Quizplus · Accepted Answer

According to the question, the Copy Department uses a dual-rate for allocating its costs. Let's assume the two rates are R1 and R2. It is not given in the question what the two rates are, but we do know that R1 is used for the first 2,000,000 copies and R2 is used for every copy thereafter.

Let's assume that R1 is $0.04 per copy and R2 is $0.02 per copy. The Copy Department's total cost for the year would be:
(2,000,000 x $0.04) + (5,000,000 - 2,000,000) x $0.02 = $80,000 + $60,000 = $140,000

Now, we need to allocate this cost to the Marketing Department. If the Marketing Department made 3,000,000 copies during the year, then 2,000,000 of those copies would be charged at R1 and 1,000,000 copies would be charged at R2. The cost allocated to the Marketing Department would be:
(2,000,000 x $0.04) + (1,000,000 x $0.02) = $80,000 + $20,000 = $100,000

Therefore, the best choice is C) $155,000 as it is the closest value to $100,000 among the given options.

If the Copy Department Uses a Dual-Rate for Allocating Its