A. Alice Beauty & Spa has a new promotion that offers a free gift-wrapping service for its customers. Alices customer-service department has budgeted fixed cost of RM6,750 each month. The budgeted variable cost to gift wrap an item is RM0.50. Although the service is free to customers, a gift-wrapping service cost allocation is made to the department where the item was purchased. The customer-service department reported the following for the most recent month:

a. Using the single-rate method, allocate gift-wrapping costs to different departments in these three ways.

i. Calculate the budgeted rate based on the budgeted number of gifts to be wrapped and allocate costs based on actual usage.

(5 marks)

ii. Calculate the budgeted rate based on the practical gift-wrapping capacity available and allocate costs based on the actual usage.

(5 marks)

b. Using the dual-rate method, compute the amount allocated to each department when (i) fixed-cost rate is calculated using budgeted costs and the practical gift-wrapping capacity, (ii) fixed costs are allocated based on budgeted usage of gift-wrapping services, and (iii) variable costs are allocated using the budgeted variable-cost rate and actual usage.

Department Actual number of gifts Budgeted number of wrapped gifts to be wrapped Practical capacity available for gift- wrapping Women's face wash 2,100 2,475 2,625 Men's face wash 750 825 938 Fragrances 1,575 1,800 1,969