The KansasCity power plant that services all manufacturing departments of MidWest Engineering has a budget for the coming year. This budget has been expressed in the following monthlyterms:

The expected monthly costs for operating the power plant during the budget year are $18,000: $9,000 variable and $9,000 fixed.

Read the requirement

Manufacturing Department

Needed at Practical Capacity Production Level (Kilowatt-Hours)

Average Expected Monthly Usage (Kilowatt-Hours)

Livonia

13,000

16,000

Warren

29,000

12,000

Dearborn

12,000

18,000

Westland

6,000

4,000

Total

60,000

50,000

Requirement 1. Assume that a single cost pool is used for the power plant costs. What budgeted amounts will be allocated to each manufacturing department if(a) the rate is calculated based on practical capacity and costs are allocated based on practical capacity and(b) the rate is calculated based on expected monthly usage and costs are allocated based on expected monthlyusage?

Requirement 2. Assume thedual-rate method is used with separate cost pools for the variable and fixed costs. Variable costs are allocated on the basis of expected monthly usage. Fixed costs are allocated on the basis of practical capacity. What budgeted amounts will be allocated to each manufacturingdepartment? Why might you prefer thedual-rate method?

Begin by calculating the budgeted amounts that will be allocated to each manufacturing department.

19.Hanung Corp has two servicedepartments, Maintenance and Personnel. Maintenance Department costs of $330,000 are allocated on the basis of budgeted maintenancehours. Personnel Department costs of $110,000 are allocated based on the number of employees. The costs of operating departments A and B are $176,000 and $264,000, respectively. Data on budgeted maintenance hours and number of employees are asfollows:

Support Departments

Production Departments

Maintenance Department

Personnel Department

A

B

Budgeted costs

$330,000

$110,000

$176,000

$264,000

Budgeted maintenancehours

NA

820

1,280

690

Number of employees

65

NA

200

610

Using the directmethod, what amount of Maintenance Department costs will be allocated to DepartmentB?

20.Potter Replica produces a specialty statue for sale to collectors. In 2017, Potter's expected and actual output was 12,000 statues. Potter sold 10,000 statues at an average selling price of $425. Other information for Potter for 2017 is givenbelow:

Direct materials

$87.50 per unit

Variable manufacturing costs

$50 per unit

Fixed manufacturing costs

$62.50 per unit

Variable administrative costs

$25.00 per unit

Calculate Potter Replica's cost per statue under(a) absorptioncosting, (b) variablecosting, and(c) throughput costing. What is Potter's throughput margin for 2017?