The Corporation Victor operates one central plant that has one support department and two production...
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Accounting
The Corporation Victor operates one central plant that has one support department and two production divisions: Division 1 and Division 2. The following data apply to the coming budget year:
Budgeted costs of the support department
Fixed operating costs $260,000
Variable operating costs $100 per hour
Practical capacity 2,000 hours
Budgeted long-run usage:
Division 1 800 hours per year
Division 2 500 hours per year
Assume that actual usage of the Division 1 was 700 hours and the Division 2 was 400 hours.Assume that annual budgeted long-run usage (Demand) is used to calculate the allocation rates for the Division 1 and Division 2 of Corporation Victor.
Required:
If a dual-rate cost-allocation method is used, what amount of cost will be allocated to the Division 1? To the Division 2?
A.
$120,864 and $101,799
B.
70,000 and $100,000
C.
$230,000 and $140,000
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