The Copy Department in the College of Business at State University provides photocopying service for both the Marketing and Economics Department.The following budget has been prepared for the year.$$\begin{array} { | l | l | }
\hline \text { Available capacity } & 6,000,000 \text { pages } \
\hline \text { Budgeted us age: } & \
\hline \text { Marketing } & 3,600,000 \text { pages } \
\hline \text { Economics } & 1,800,000 \text { pages } \
\hline \text { Cost equation } & \$ 120,000 + \$ 0.025 \text { per page } \
\hline
\end{array}$$If the Copy Department uses a dual-rate for allocating its costs,how much cost will be allocated to the Economics Department,assuming the Economics Department actually made 1,500,000 copies during the year?
A) $77,500.
B) $92,500.
C) $132,500.
D) $112,500.

Question

The Copy Department in the College of Business at State University provides photocopying service for both the Marketing and Economics Department.The following budget has been prepared for the year.$$\begin{array} { | l | l | } 
\hline \text { Available capacity } & 6,000,000 \text { pages } \
\hline \text { Budgeted us age: } & \
\hline \text { Marketing } & 3,600,000 \text { pages } \
\hline \text { Economics } & 1,800,000 \text { pages } \
\hline \text { Cost equation } & \$ 120,000 + \$ 0.025 \text { per page } \
\hline
\end{array}$$If the Copy Department uses a dual-rate for allocating its costs,how much cost will be allocated to the Economics Department,assuming the Economics Department actually made 1,500,000 copies during the year? 
A) $77,500.
B) $92,500.
C) $132,500.
D) $112,500.

Quizplus · Accepted Answer

The correct answer is A.The Economics Department is allocated $77,500 in costs using a dual-rate allocation system. The total cost of the Copy Department is $120,000 + $0.025 per page. The Economics Department is allocated $120,000 x (1,500,000 / 6,000,000) + $0.025 x 1,500,000 = $77,500.