1.Corporation Victor operates one central plant that has two divisions: Division 1 and Division Budgeted costs of...
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Question:
1.Corporation "Victor" operates one central plant that has two divisions: Division 1 and Division
Budgeted costs of the operating
plant for 10,000 to 20,000 hours:$260,000
Fixed operating cost100 per hour
Variable Operating costs2,000 hours
Practical capacity
Budgeted long-run usage:
Division 1800 hours per year
Division 2500 hours per year
Assume that practical capacity is used to calculate the allocation rates. Further assume that actual usage of the Division 1 was 700 hours and Division 2 was 400 hours.
If a single-rate cost- allocation method is used, what amount of cost will be allocated to the Division 1? To the Division 2?
a. none
b. 91,000 and 52,000
c. 15,000 and 8,000
d. 161,000 and 92,000
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