Dual-rate method, budgeted versus actual costs and quantities (continuation of 15-17). Chocolat Inc. decides to examine the effect of using the dual-rate method for allocating truck costs to each roundtrip. At the start of 2012, the budgeted costs were as follows:
Variable cost per round-trip.........$ 1,350
Fixed costs..................$47,500
The actual results for the 45 round-trips made in 2012 were as follows:
Variable costs................$58,500
Fixed costs................38,250
....................$96,750
Assume all other information to be the same as in Exercise 15-17.
Required
1. Using the dual-rate method, what are the costs allocated to the dark chocolate division and the milk chocolate division when (a) variable costs are allocated using the budgeted rate per round-trip and actual round-trips used by each division and when (b) fixed costs are allocated based on the budgeted rate per round-trip and round-trips budgeted for each division?
2. From the viewpoint of the dark chocolate division, what are the effects of using the dual-rate method rather than the single-rate methods?