The Copy Department in the College of Business at State University provides phot

Question

The Copy Department in the College of Business at State University provides photocopying service for both the Marketing and Economics Department. The following budget has been prepared for the year.

If the Copy Department uses a dual-rate for allocating its costs, how much cost will be allocated to the Economics Department, assuming the Economics Department actually made 7,350,000 copies during the year?

A. $189,900

B. $184,800

C. $267,750

D. $351,750

The Copy Department in the College of Business at State University provides photocopying service for both the Marketing and Economics Department. The following budget has been prepared for the year.

Explanation / Answer

Fixed cost allocated to economis dept = (Fixed cost/Total Budgeted usage) * Budgeted usage of economis dept

= (252000/12600000) * 4200000

= $84000

Variable cost of economis dept = 0.025 * no. of pages ade by economis dept

= 0.025*7350000

= $183750

Total cost= $84000 + $183750

= $267750

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