Global Corporation has one service department and two operating divisions and uses service department hours to allocate costs to the operating divisions. The following data
Global Corporation has one service department and two operating divisions and uses service department hours to allocate costs to the operating divisions. The following data apply to the upcoming year. Budgeted costs of the service division are: Fixed costs per year $8,000,000 Variable costs $70 per hour Budgeted usage in hours per year: Operating Division 1 80,000 hours Operating Division 2 70,000 hours Operating Division 1s actual usage for the year was 70,000 hours and Operating Division 2s actual usage was 65,000 hours. If a dual-rate cost-allocation method is used, what amount of service department costs will be allocated to Operating Division 1? Assume budgeted usage is used to allocate fixed costs and actual usage is used to allocate variable costs. (Round to nearest dollar) Select one:
a. $9,133,333
b. $9,166,667
c. $9,466,667
d. $9,666,667
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