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: $82,250 10,000 Salaries (fixed) Employee benefits (fixed) Depreciation of copy machines (fixed) 10,000 Utilities (fixed) Paper (variable, I cent per copy) Toner (variable, 1 cent per copy) 5,000 50,000 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, 2,724,250 for sales and 3,061,250 for administration, calculate the copy department costs allocated to sales

Explanation / Answer

Total Fixed Cost = Salaries + Employee benefits + depreciation + utilities

            = 82250 + 10000 + 10000 + 5000 = $107250

Given, total fixed cost allocated to sales = 40% (107250) = $ 42900

Total variable cost allocated to sales = 2724250 * 0.02 = $ 54485

So, Copy department costs allocated to sales = 42900 + 54485 = $ 97385

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