Chocolade Inc. is a producer of premium chocolate based in Palo Alto. The company has a separate division for each of its twoproducts: dark chocolate and milk chocolate. Chocolade purchases ingredients from Wisconsin for its dark chocolate division and from Louisiana for its milk chocolate division. Both locations are the same distance from Chocolade's Palo Alto plant. Chocolade Inc. operates a fleet of trucks as a cost center 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 income. For 2013, the trucking fleet had a practical capacity of 80 round-trips between the Palo Alto plant and the two suppliers. It recorded the following information:

SINGLE-RATE METHOD DATA

Requirements

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 method?

Format goes like..

Budgeted Actual Costs of truck fleet $ 168,000 $ 161,250 Number of round-trips for dark chocolate division (Palo Alto plant - Wisconsin) Number of round-trips for milk chocolate division (Palo Alto plant - Louisiana) 45 45 35 30