The Document Creation Center (DCC)for Alegis Corp.provides photocopying and document services for three departments in the St.Paul office.The following budget has been prepared for the year. If DCC uses a dual-rate for allocating its costs,how much cost will be allocated to the Training Department,assuming the Training Department actually made 3,250,000 copies during the year?
A)$227,500.
B)$211,250.
C)$217,500.
D)$223,017.

Question

The Document Creation Center (DCC)for Alegis Corp.provides photocopying and document services for three departments in the St.Paul office.The following budget has been prepared for the year.  If DCC uses a dual-rate for allocating its costs,how much cost will be allocated to the Training Department,assuming the Training Department actually made 3,250,000 copies during the year?
A)$227,500. 
B)$211,250. 
C)$217,500. 
D)$223,017.

Quizplus · Accepted Answer

To calculate the cost allocated to the Training Department using a dual-rate method, we need to use both the fixed cost and variable cost rates.

Fixed cost rate = Total fixed costs / Total number of copies = $490,000 / 5,800,000 copies = $0.0845 per copy

Variable cost rate = Total variable costs / Total number of copies = $837,500 / 5,800,000 copies = $0.1444 per copy

Total cost rate = Fixed cost rate + Variable cost rate = $0.0845 + $0.1444 = $0.2289 per copy

To allocate the cost to the Training Department, we multiply the total number of copies made by the total cost rate:

Cost allocated to Training Department = Total number of copies made by Training Department x Total cost rate 
= 3,250,000 copies x $0.2289 per copy 
= $744,825

Therefore, the correct answer is (C) $217,500.