Single$-$rate versus dual$-$rate methods, support department. The Ukraine power plant that services

all manufacturing departments of CC Engineering has a budget for the coming year. This budget has been

expressed in the following monthly terms:

Manufacturing

Department

Needed at Practical Capacity

Production Level $($Kilowatt$-$Hours$)$

Average Expected Monthly

Usage $($Kilowatt$-$Hours$)$

Livonia $16,00012,000$

Warren $22,00010,000$

Dearborn $23,0008,000$

Westland $19,00010,000$

Total $80,00040,000$ The expected monthly costs for operating the power plant during the budget year are $$21,600$: $$4,000$ variable

and $$17,600$ fixed.

$1.$ Assume that a single cost pool is used for the power plant costs. What budgeted amounts will be allocated to each manufacturing department if $($a$)$ the rate is calculated based on practical capacity

and costs are allocated based on practical capacity and $($b$)$ the rate is calculated based on expected

monthly usage and costs are allocated based on expected monthly usage?

$2.$ Assume the dual$-$rate method is used with separate cost pools for the variable and fixed costs. Variable

costs are allocated on the basis of expected monthly usage. Fixed costs are allocated on the basis of

practical capacity. What budgeted amounts will be allocated to each manufacturing department? Why

might you prefer the dual$-$rate method?