Euclid College recently leased a photocopy machine for $1,500 per month plus $0.04 per copy.Additional variable operating costs were $0.02 per copy.Euclid College estimated it would produce 30,000 copies per month.The Accounting Department estimated it would produce 6,000 copies, but actually produced only 4,000 copies.If Euclid College uses a predetermined rate per copy, then _____ would be allocated to the Accounting Department.
A)$540
B)$660
C)$440
D)$240

Question

Quizplus · Accepted Answer

The predetermined rate per copy is calculated by adding the monthly lease cost and the variable operating cost per copy, then dividing by the estimated number of copies per month:

Predetermined rate per copy = (Monthly lease cost + Variable operating cost per copy) / Estimated number of copies per month
Predetermined rate per copy = ($1,500 + $0.04 + $0.02) / 30,000
Predetermined rate per copy = $0.06

Using this rate, the total cost allocated to the Accounting Department would be:

Total cost allocated to Accounting Department = 4,000 copies x $0.06 per copy
Total cost allocated to Accounting Department = $240

Therefore, the best choice is C.

Euclid College Recently Leased a Photocopy Machine for $1,500 Per