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Georgia Corporation operates one central plant that has two divisions, the Flashlight Division and the Night Light Division. The following data apply to the coming
Georgia Corporation operates one central plant that has two divisions, the Flashlight Division and the Night Light Division. The following data apply to the coming budget year: Budgeted costs of operating the plant for 2000 to 3000 hours: Fixed operating costs per year I $500,000 Variable operating costs $850 per hour Budgeted long-run usage per year: Flashlight Division 2000 hours Night Light Division 1000 hours Practical capacity 4000 hours Assume that practical capacity is used to calculate the allocation rates. Actual usage for the year by the Flashlight Division was 1500 hours and by the Night Light Division was 800 hours. If a dual-rate cost-allocation method is used, what amount of operating costs will be budgeted for the Night Light Division? $950,000 OO $780,000 O $975,000 O $930,000
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