Illumination 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 $480,000

Variable operating costs $800 per hour

Budgeted long-run usage per year:

Flashlight Division 1500 hours

Night Light Division 600 hours

Practical capacity 3000 hours

Assume that practical capacity is used to calculate the allocation rates.

Actual usage for the year by the Flashlight Division was 1400 hours and by the Night Light Division was 700 hours. If a single-rate cost-allocation method is used, what amount of operating costs will be allocated to the Night Light Division? Assume budgeted usage is used to allocate operating costs?

a.

$672,000

b.

$592,000

c.

$576,000

d.

$656,000

If a single-rate cost-allocation method is used, what amount of cost will be allocated to the Night Light Division? Assume actual usage is used to allocate operating costs?

a.

$672,000

b.

$592,000

c.

$592,000

d.

$576,000

If a dual-rate cost-allocation method is used, what amount of cost will be allocated to the Night Light Division? Assume budgeted usage is used to allocate fixed operating costs and actual usage is used to allocate variable operating costs.

a.

$656,000

b.

$592,000

c.

$576,000

d.

$672,000