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

Question

Triton 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 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, 2,844,000 for sales and 2,327,000 for administration, calculate the copy department costs allocated to sales.

Explanation / Answer

TOTAL FIXED COST ALLOACTED TO SALES DEPARTMENT

= $105500 * 40%

= $42200

TOTAL FIXED COST ALLOACTED TO ADMINISTRATION DEPARTMENT

= $105500 * 60%

= $63300

VARIABLE COST ALLOCATED TO SALES DEPT.

= 2844000 * $0.02

= $56880

TOTAL COST ALLOCATED TO SALES

= $42200 + $56880

= $99080

DETAILS BAMOUNT SALARIES $80500 EMPLOYEE BENEFITS $10000 DEPERICATION ON COPY MACHINES $10000 UTILITES $5000 TOTAL FIXED COST $105500

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