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, how much cost will be allocated to the Management Department, assuming the Management Department actually made 2,100,000 copies during the year?
A) $147,000.
B) $136,500.
C) $159,000.
D) $150,761.

Question

Quizplus · Accepted Answer

The dual-rate method separates fixed and variable costs. Fixed costs are allocated based on budgeted usage, while variable costs are based on actual usage. Fixed cost allocation for Management: (2,400,000/8,000,000) * $280,000 = $84,000. Variable cost for actual usage: 2,100,000 * $0.03 = $63,000. Total cost = $84,000 + $63,000 = $147,000.

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