Triton Company\'s copy department, which does almost all of the photocopying for

Question

Triton 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 copies:

Salaries (fixed) $85,250

Employee benefits                                                          (fixed) 10,000

Depreciation of copy machines (fixed)    10,000

Utilities (fixed) 5,000

Paper (variable, 1 cent per copy)           50,000

Toner (variable, 1 cent per copy)           50,000

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 the following copies were made during the year, 2,973,500 for sales and 3,262,750 for administration, calculate the copy department costs allocated to sales.

Explanation / Answer

Total cost allocated to sales department is $69740.

Budgeted cost Fixed Variable Salaries $82500 Paper @ 1 cent per copy 50000 Employee benefits 10000 Toner @ 1 cent per copy 50000 Depreciation 10000 Total variable cost 100000 Utilities 5000 Total cost 125000 Total fixed cost 25000 Allocated to sales department Details Total copies 6236250 2973500 Total fixed cost 25000 10000 (40% of 25000) Total variable cost (0.01*6236250) 62362.5 59470 (0.02*2973500) Total cost 87362.5 69470

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