Budgeted costs of operating the materials laboratory for 150.000 to 250,00 techn

Question

Budgeted costs of operating the materials laboratory for 150.000 to 250,00 technician hours per year Fixed costs per year Variable costs $8,000,000 $70 per technician hour Budgeted longminus-run usage in hours per year Large Plane Department Small Plane Department 90,000technician hours 70,000 technician hours Budgeted amounts are used to calculate the allocation rates. Actual usage for the year by the Large Plane Department was 80,000 technician hours and by the Small Plane Department was 120,000 technician hours. If a dualminus-rate costminus-allocation method is used, what amount of materials laboratory costs will be allocated to the Large Plane Department? Assume budgeted usage is used to allocate fixed materials laboratory costs and actual usage is used to allocate variable materials laboratory costs. A. $10,100,000 This is the correct answer nd amounts are usea

Explanation / Answer

Allocation of materials laboratory costs to Large plane department:

Fixed cost: 90,000/160,000×$8,000,000=$4,500,000

Variable cost:80,000 tech. Hours ×$70 per tech. Hours=$5,600,000

Total cost allocated to Large plane=$10,100,000

*Total budgeted tech. Hours=90000+70000=160,000 tech. Hours

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