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Chocolade Inc. is a producer of premium chocolate based in Owen Sound. The company has a separate division for each of its two products: dark
Chocolade Inc. is a producer of premium chocolate based in Owen Sound. The company has a separate division for each of its two products: dark chocolate and milk chocolate. Chocolade purchases ingredients from Toronto for its dark chocolate division and from Barrie for its milk chocolate division. Both locations are the same distance from Chocolade's Owen Sound plant. Chocolade Inc. operates a fleet of trucks as a cost centre that charges the divisions for variable costs (drivers and fuel) and fixed costs (vehicle amortization, insurance, and registration fees) of operating the fleet. Each division is evaluated on the basis of its operating income. E (Click the icon to view the truck fleet information.) (Click the icon to view the cost information for 2018.) Required Requirement 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? Dark chocolate Milk chocolate Variable costs Fixed costs Total costs Cost information Truck fleet information Chocolade Inc. decides to examine the effect of using the dual-rate method for allocating truck costs to each round trip For 2018, the trucking fleet had a practical capacity of 45 round trips between the Owen Sound plant and the two suppliers. It recorded the following information At the start of 2018, the budgeted costs were as follows. Budgeted Actual Variable cost per round trip $ 1,300 Costs of truck fleet $ 108,000 $ 82,000 Fixed costs $ 49,500 The actual results for the 40 round trips made in 2018 were as follows. 30 30 Variable costs $ 59,500 22,500 Number of round trips for dark chocolate division (Owen Sound plant - Toronto) Number of round trips for milk chocolate division (Owen Sound plant - Barrie) Fixed costs 15 10 $ 82,000 Print Done Print Done
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