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:

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, 2,670,250 for sales and 2,461,500 for administration, calculate the copy department costs allocated to sales.

Explanation / Answer

Total Fixed Cost = Salaries (fixed) + Employee benefits (fixed) + Depreciation of copy machines (fixed + Utilities (fixed)

Total Fixed Cost = 93750+10000 + 10000+5000

Total Fixed Cost = $ 118750

Sales department = Total Fixed Cost * 40% +  variable costs per cent * No of Copies made

Sales department = 118750*40% + 0.02*2670250

Sales department = $ 100905

Answer

Copy department costs allocated to sales = $ 100,905

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