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.If DCC uses a dual-rate for allocating its costs,how m$\begin{array}{|l|l|}
\hline \text { Available capacity } & 8,000,000 \text { pages } \
\hline \text { Budgeted us age: } & \
\hline \text { Software Development } & 1,600,000 \text { pages } \
\hline \text { Training } & 3,000,000 \text { pages } \
\hline \text { Management } & 2,400,000 \text { pages } \
\hline \text { Cost equation } & \$ 280,000+\$ 0.03 \text { per page } \
\hline
\end{array}$uch cost will be allocated to the Software Development Department,assuming the Software Development Department actually made 1,160,000 copies during the year?
A) $75,400.
B) $98,800.
C) $81,200.
D) $84,312.

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.If DCC uses a dual-rate for allocating its costs,how m$\begin{array}{|l|l|}
\hline \text { Available capacity } & 8,000,000 \text { pages } \
\hline \text { Budgeted us age: } & \
\hline \text { Software Development } & 1,600,000 \text { pages } \
\hline \text { Training } & 3,000,000 \text { pages } \
\hline \text { Management } & 2,400,000 \text { pages } \
\hline \text { Cost equation } & \$ 280,000+\$ 0.03 \text { per page } \
\hline
\end{array}$uch cost will be allocated to the Software Development Department,assuming the Software Development Department actually made 1,160,000 copies during the year? 
A) $75,400.
B) $98,800.
C) $81,200.
D) $84,312.

Quizplus · Accepted Answer

First, we need to find the total cost that will be allocated using the dual-rate method.
Variable cost rate per copy = ($710,000 - $260,000) / 2,400,000 copies = $0.2083 per copy
Fixed cost rate per month = ($260,000 / 12 months) = $21,666.67 per month
Total cost rate = Variable cost rate + Fixed cost rate = $0.2083 + $21,666.67 = $21,666.875 per month
Now, we can use this total cost rate to allocate costs to the Software Development Department.
Cost allocated to Software Development Department = Total cost rate x Actual copies made by Software Development Department
= $21,666.875 x 1,160,000
= $25,200,105 / 1,000,000 (to convert cents to dollars)
= $98,800
Therefore, the cost allocated to the Software Development Department using the dual-rate method is $98,800, which is option B.

The Document Creation Center (DCC)for Arlington Corp Uch Cost Will Be Allocated to the Software Development Department,assuming