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mash [69]
3 years ago
12

The Copy Department in the College of Business at State University provides photocopying service for both the Marketing and Econ

omics Department. The following budget has been prepared for the year. Available capacity 6,000,000 pages Budgeted usage: Marketing 3,600,000 pages Economics 1,800,000 pages Cost equation $120,000 $0.025 per page If the Copy Department uses a dual rate for allocating its costs based on usage, how much cost will be allocated to the Marketing Department
Business
1 answer:
fiasKO [112]3 years ago
7 0

Answer:

The correct answer is $170,000.

Explanation:

According to the scenario, computation of the given data are as follows:

We can calculate the cost allocated to Marketing by using following formula:

Total cost allocated = Fixed cost + Variable cost

Where, Fixed cost = (3,600,000 ÷ 5,400,000) × $120,000

= $80,000

And , Variable cost = $0.025 × 3,600,000 = $90,000

By putting the value, we get

Total cost allocated = $80,000 + $90,000

= $170,000

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a. Make the new product and buy the part to earn an extra $1.00 per unit contribution to profit.

b. Make the new product and buy the part to earn an extra $4.00 per unit contribution to profit.

c. Continue to make the part to earn an extra $3.00 per unit contribution to profit.

d. Continue to make the part to earn an extra $8.00 per unit contribution to profit.

The explanation of the answer is now given as follows:

Since all of the fixed manufacturing overhead costs would continue whether Part B89 is made internally or purchased from an outside supplier, it implies that the fixed manufacturing overhead costs will not be considered in taking the decision.

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