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Archery Equipment Corporation (AEC) manufactures lawn mowers in two divisions: Commercial and Consumer. Both divisions require the support of Product Development, an engineering service department
Archery Equipment Corporation (AEC) manufactures lawn mowers in two divisions: Commercial and Consumer. Both divisions require the support of Product Development, an engineering service department that designs new products based on marketing data. The following annual information is available: Required: 1. Determine the allocation of Product Development costs to the two divisions using the single rate method where the actual hours of usage will be the allocation base. 2. Determine the allocation of Product Development costs to the two divisions using the dual rate method, assuming fixed costs use budgeted hours while variable costs use actual hours of usage as allocation bases
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