Use the following information for the next 2 questions.
Cervantes Industries provides an in-house cafeteria for production and administrative employees. This service costs $25,000 per month, plus $3 per meal served. The company has 800 production employees and 400 administrative employees. During the past month 5,500 meals were served to production employees and 2,000 to administrative.
-The amount allocated to the operating department using a dual-rate basis with the fixed cost allocation based on number of employees is
A) $33,167
B) $31,683
C) $24,833
D) $41,500

Question

Quizplus · Accepted Answer

The fixed cost is allocated based on the number of employees: $25,000 * (800/1200) = $16,667 for production and $25,000 * (400/1200) = $8,333 for administrative. The variable cost is $3 per meal: $3 * 5,500 = $16,500 for production and $3 * 2,000 = $6,000 for administrative. Total for production = $16,667 + $16,500 = $33,167.

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