15-16 Single-rate versus dual-rate methods, support department.

The Cincinnati power plant that services all manufacturing departments of Eastern Mountain Engineering has a budget for the coming year. This budget has been expressed in the following monthly terms:

Manufacturing Department Needed at Practical Capacity Production Level (Kilowatt- Hours) Average Expected Monthly Usage (Kilowatt - Hours)

Loretta 13,000 10,000

Bently 21,000 9,000

Melboum 14,000 10,000

Eastmoreland 32,000 11,000

Total 80,000 40,000

The expected monthly costs for operating the power plant during the budget year are $20,000: $8,000 variable and $12,000 fixed.

Assume that a single cost pool is used for the power plant costs. What budgeted amounts will be allocated to each manufacturing department if (a) the rate is calculated based on practical capacity and costs are allocated based on practical capacity and (b) the rate is calculated based on expected monthly usage and costs are allocated based on expected monthly usage?