Chocolade Inc. is a producer of premium chocolate based in Palo Alto. (Click the icon to view additional information.) Chocolade Inc. decides to examine the effect of using the dual-rate method for allocating truck costs to each round-trip. (Click the icon to view the cost information for 2017.) For 2017, the trucking fleet had a practical capacity of 65 round-trips between the Palo Alto plant and the two suppliers. It recorded the following information: (Click the icon to view the budget and actual data.) Read the requirements. 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 Requirement 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? The dual rate how the fixed indirect cost component is treated. By using budgeted trips made, the dark chocolate division is changes from its own budgeted usage or that of other divisions. When budgeted rates and actual trips are used for allocation, the dark chocolate division is assigned amount for fixed costs as under the dual-rate method because it made V number of trips as budgeted. More Info The company has a separate division for each of its two products: 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. Data Table Budgeted Actual $ 143,000 $ 114,000 Costs of truck fleet Number of round-trips for dark chocolate division (Palo Alto plant - Wisconsin) Number of round-trips for milk chocolate division (Palo Alto plant - Louisiana) 35 35 30 25 Data Table At the start of 2017, the budgeted costs were: Variable cost per round-trip $ $ 1,350 55,250 Fixed costs The actual results for the 60 round-trips made in 2017 were: Variable cost $ 61,000 53,000 Fixed costs $ 114,000 i Single-rate method Rate per round-trip Total costs Dark chocolate Milk chocolate $ 77,000 $ 66,000 77,000 55,000 Costs allocated by Budgeted round-trips Actual round-trips used Actual round-trips used Budgeted Budgeted Actual 66,500 47,500