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ChocoMix Inc. is a producer of premium chocolate based in Palo Alto. 2020, the trucking fleet had a practical capacity of 70 round-trips between the
ChocoMix
Inc. is a producer of premium chocolate based in Palo Alto.
2020,
the trucking fleet had a practical capacity of
70
round-trips between the Palo Alto plant and the two suppliers. It recorded the following information:
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ChocoMix Inc. is a producer of premium chocolate based in Palo Alto. (Click the icon to view additional information.) For 2020, the trucking fleet had a practical capacity of 70 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.) ChocoMix 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 2020.) 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? The company has a separate division for each of its two products: dark chocolate and milk chocolate. ChocoMix purchases ingredients from Wisconsin for its dark chocolate division and from Louisiana for its milk chocolate division. Both locations are the same distance from ChocoMix's Palo Alto plant. ChocoMix 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. 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? Single-rate method data: \begin{tabular}{|c|c|c|} \hline \multirow[b]{2}{*}{Single-rateallocationmethods-Rateperround-tripandcostallocationmethod} & \multicolumn{2}{|c|}{ Total costs } \\ \hline & Darkchocolate & Milkchocolate \\ \hline 1.Budgetedrateperround-tripandallocatecostsbasedonround-tripsbudgetedforeachdivision & 76,000 & 57,000 \\ \hline 2.Budgetedrateperround-tripandallocatecostsbasedonactualround-tripsusedbyeachdivision & 76,000 & 47,500 \\ \hline 3.Actualrateperround-tripandallocatecostsbasedonactualround-tripsusedbyeachdivision & 76,000 & 47,500 \\ \hline \end{tabular} 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? ChocoMix Inc. is a producer of premium chocolate based in Palo Alto. (Click the icon to view additional information.) For 2020, the trucking fleet had a practical capacity of 70 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.) ChocoMix 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 2020.) 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? The company has a separate division for each of its two products: dark chocolate and milk chocolate. ChocoMix purchases ingredients from Wisconsin for its dark chocolate division and from Louisiana for its milk chocolate division. Both locations are the same distance from ChocoMix's Palo Alto plant. ChocoMix 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. 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? Single-rate method data: \begin{tabular}{|c|c|c|} \hline \multirow[b]{2}{*}{Single-rateallocationmethods-Rateperround-tripandcostallocationmethod} & \multicolumn{2}{|c|}{ Total costs } \\ \hline & Darkchocolate & Milkchocolate \\ \hline 1.Budgetedrateperround-tripandallocatecostsbasedonround-tripsbudgetedforeachdivision & 76,000 & 57,000 \\ \hline 2.Budgetedrateperround-tripandallocatecostsbasedonactualround-tripsusedbyeachdivision & 76,000 & 47,500 \\ \hline 3.Actualrateperround-tripandallocatecostsbasedonactualround-tripsusedbyeachdivision & 76,000 & 47,500 \\ \hline \end{tabular} 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
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