Grand Chocolate 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. purchases ingredients from Toronto for its dark chocolate division and from Barrie for its milk chocolate division. Both locations are the same distance from 's Owen Sound plant. 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.

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?

Truck fleet information For the year, the trucking fleet had a practical capacity of 65 round trips between the Owen Sound plant and the two suppliers. It recorded the following information. Cost information Grand Chocolate Inc. decides to examine the effect of using the dual-rate method for allocating truck costs to each round trip. At the start of the year, the budgeted costs were as follows. The actual results for the 60 round trips made in the year were as follows