=+13-17 KK Single-rate method, budgeted versus actual costs and quantities OBJECTIVE 2 Velvet Ltd is a producer of premium chocolate based in Hobart. The company has a separate division for each of its two products:

dark chocolate and milk chocolate. Velvet Ltd purchases ingredients from Launceston for its Dark Chocolate Division and from Devonport for its Milk Chocolate Division. Both locations are the same distance from Velvet Ltd’s Hobart plant.

Velvet Ltd operates a fleet of trucks as a cost centre that charges the divisions for variable costs (drivers and fuel) and fixed costs

(vehicle depreciation, insurance and registration fees) of operating the fleet. Each division is evaluated on the basis of its operating profit. For 2014, the trucking fleet has a practical capacity of 50 round-trips between the Hobart plant and the two suppliers.

It recorded the following information:

1 2

3 4

A B C Budgeted Actual teelf kcurt fo stsoC 05769$000511$

Number of round-trips for Dark Chocolate Division (Hobart plant—Launceston) 30 30 Number of round-trips for Milk Chocolate Division (Hobart plant—Devonport) 20 15 Required 1 Using the single-rate method, allocate costs to the Dark Chocolate Division and the Milk Chocolate Division in these three ways:

a Calculate the budgeted rate per round-trip and allocate costs based on round-trips budgeted for each division.

b Calculate the budgeted rate per round-trip and allocate costs based on actual round-trips used by each division.

c Calculate the actual rate per round-trip and allocate costs based on actual round-trips used by each division.