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The Bonawitz Corporation has a central copying facility
The Bonawitz Corporation has a central copying facility. The copying facility has only two users, the Marketing
Department and the Operations Department. The followine data apply to the comma bud et Tar:
Budgeted costs of operating the copying facility for 200,000 to 300,000 copies: Fixed costs per year 530,000 Variable costs 3 cents (.03) per copy Budgeted long-run usage in copies per year: Marketing Department 50,000 copies Operations Department 190,000 copies
Budgeted amounts are used to calculate the allocation rates. Actual usage for the year by the Marketing Department was 40,000 copies and by the Operations Department was 180,000 copies.
If a single-rate cost allocation method is used, what amount of copying facility costs will be budgeted for the Marketing Department?
O $9,000 O $1,800 O $7,200 O $24.600 $28.500
Expert Solution
Computation of Amount of Copying Facility Costs that will be Budgeted to the Marketing Department:
Total Budgeted Number of Copies = 60,000 + 190,000 = 250,000
Budgeted Fixed Costs = $30,000
Budgeted Variable Costs = $0.03 * 250,000 = $7,500
Budgeted Total Costs = Budgeted Fixed Costs + Budgeted Variable Costs
= $30,000 + $7,500
= $37,500
Single-rate Cost Allocation Rate = Budgeted Total Costs / Total Budgeted Number of Copies
= $37,500 / 250,000 copies
= $0.15 per copy
Budgeted usage by the Marketing Department = 60,000 copies
Amount of Copying Facility Costs Budgeted for the Marketing Department = Single-rate Cost Allocation Rate * Budgeted Usage by the Marketing Department
= $0.15 per copy * 60,000 copies
= $9,000
So, Amount of Copying Facility Costs Budgeted for the Marketing Department is $9,000. The correct option is 1st "$9,000".
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