Apex Company’s copy department, which does almost all of the photocopying for th

Question

Apex Company’s copy department, which does almost all of the photocopying for the sales department and the administrative department, budgets the following costs for the year, based on the expected activity of 4,991,100 copies:

The costs are assigned to two cost pools, one for fixed and one for variable costs. The costs are then assigned to the sales department and the administrative department. Fixed costs are assigned on a lump-sum basis, 40 percent to sales and 60 percent to administration. The variable costs are assigned at a rate of 2 cents per copy.

Assuming 4,791,100 copies were made during the year, 2,489,700 for sales and 2,301,400 for administration, calculate the copy department costs allocated to sales and administration.

Salaries (fixed) $104,200 Employee benefits (fixed) 12,900 Depreciation of copy machines (fixed) 11,100 Utilities (fixed) 5,400 Paper (variable, 1 cent per copy) 49,911 Toner (variable, 1 cent per copy) 49,911

Explanation / Answer

cost allocation:

sale department admin department

fixed expense 53440 80160

variable: 49794 46028

Total $103234 $126188

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