Question
The Fancy Flier Airplane Corporation has a central materials laboratory. The laboratory has only two users, the Large Plane Department and the Small Plane Department.
The Fancy Flier 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 materials laboratory for 10,000 to 20,000 technician hours per year: Fixed costs per year $600,000 Variable costs $80 per technician hour Budgeted long-run usage in hours per year: Large Plane Department 9,000 technician hours Small Plane Department 7,000 technician hours Budgeted amounts are used to calculate the allocation rates. Actual usage for the year by the Large Plane Department was 6,000 technician hours and by the Small Plane Department was 6,500 technician hours. 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 copying costs. a. $822,500 b. $1,476,923 c. $1,057,500 d. $705,000 e. $763,750
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