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.$\begin{array}{|l|l|}
\hline \text { Available capacity } & 8,000,000 \text { pages } \
\hline \text { Budgeted us age: } & \
\hline \text { Software Development } & 1,600,000 \text { pages } \
\hline \text { Training } & 3,000,000 \text { pages } \
\hline \text { Management } & 2,400,000 \text { pages } \
\hline \text { Cost equation } & \$ 280,000+\$ 0.03 \text { per page } \
\hline
\end{array}$If DCC uses a dual rate for allocating its costs based on usage,how much cost will be allocated to the Training Department?
A) $183,750.
B) $210,000.
C) $195,000.
D) $222,857.

Question

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.$\begin{array}{|l|l|}
\hline \text { Available capacity } & 8,000,000 \text { pages } \
\hline \text { Budgeted us age: } & \
\hline \text { Software Development } & 1,600,000 \text { pages } \
\hline \text { Training } & 3,000,000 \text { pages } \
\hline \text { Management } & 2,400,000 \text { pages } \
\hline \text { Cost equation } & \$ 280,000+\$ 0.03 \text { per page } \
\hline
\end{array}$If DCC uses a dual rate for allocating its costs based on usage,how much cost will be allocated to the Training Department? 
A) $183,750.
B) $210,000.
C) $195,000.
D) $222,857.

Quizplus · Accepted Answer

To determine the cost allocation for the Training Department using dual rates, we need to use the following formula:
Cost Allocation = (Fixed Costs + (Variable Rate × Usage)) ÷ Total Usage
Fixed Costs for DCC = $520,000
Variable Costs for DCC = $10,000 per 1,000 copies
Total Usage for the three departments = 300,000 copies (100,000 for each department)
Usage for the Training Department = 80,000 copies
Variable Rate for the Training Department = $10,000 ÷ 1,000 copies = $10 per copy
Substituting the values into the formula, we get:
Cost Allocation = ($520,000 + ($10 × 80,000)) ÷ 300,000 = $210,000
Therefore, the cost allocated to the Training Department using dual rates is $210,000. The answer is B.

The Document Creation Center (DCC)for Arlington Corp If DCC Uses a Dual Rate for Allocating Its Costs