Bullock\'s Company\'s copy department, which does almost all of the photocopying

Question

Bullock's 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 5,000,000 copies:

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, 2,634,000 for sales and 2,594,000 for administration, calculate the copy department costs allocated to sales

Explanation / Answer

Hi,

Please find the answer as follows:

Allocation of Fixed Cost = Total Fixed Cost*% Allocated to Sales Department = (91500 + 10000 + 10000 + 5000)*40% = 46600

+

Allocation of Variable Cost = Number of Sales Department Copies*Variablce Costs = 2634000*.02 = 52680

Total Cost Allocated to Sales = 46600 + 52680 = 99280

Answer is 99280.

Thanks.

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.