The Earl Airplane Corporation has a central materials laboratory. The laboratory has only

two users, the Large Plane Department and the Small Plane Department. The following data

apply to the coming budget year:

Budgeted costs of operating the central materials laboratory

for 100,000 to 200,000 technician hours per year:

Fixed costs per year $6,000,000

Variable costs $80 per technician hour

Budgeted long-run usage in hours per year:

Large Plane Department 90,000 technician hours

Small Plane Department 70,000 technician hours

Budgeted amounts are used to calculate the allocation rates.

Actual usage for the year by the Large Plane Department was 60,000 technician hours and by

The Small Plane Department was 65,000 technician hours.

If a single-rate cost-allocation method is used, what is the allocation rate per hour used?

A) $80.00

B) $117.50

C) $146.67

D) $100.00

If a dual-rate cost-allocation method is used, what amount of materials laboratory costs will be

budgeted for the Large Plane Department?

A) $10,575,000

B) $8,225,000

C) $18,800,000

D) $16,000,000

If a single-rate cost-allocation method is used, what amount of materials laboratory costs will be

allocated to the Large Plane Department? Assume actual usage is used to allocate costs.

A) $10,575,000

B) $8,225,000

C) $7,637,500

D) $7,050,000