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The Central Laboratory (a support department) of Gamma Ltd services two operating departments, Heat Testing and Stress Testing Departments. Central laboratory uses budgeted rates to
The Central Laboratory (a support department) of Gamma Ltd services two operating departments, Heat Testing and Stress Testing Departments. Central laboratory uses budgeted rates to allocate overhead. The following data apply to the current budget year: Budgeted costs of operating the plant: Total fixed operating costs per year $720,000 Variable operating costs $40 per technician hour Technician hours Usage Budgeted Actual Heat Testing Department Stress Testing Department 26,000 hours 30,000 hours 22,000 hours 19,000 hours Total 48,000 hours 49,000 hours Required: If a dual-rate cost-allocation method is used, calculate the total Central Laboratory costs allocated to the Heat Testing Department? Assume: (i) budgeted usage is used to allocate fixed costs; and (ii) actual usage is used to allocate variable costs
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