Question

The Technical Services Department of Wichita State University leased a photocopy machine for $2,000 per month plus $0.04 per copy. Additional budgeted variable operating costs were $0.02 per copy. The Technical Services Department estimated the machine would produce 30,000 copies per month. The Accounting Department estimated is would make 6,000 copies per month but it actually made 4,000 copies. Assume fixed and variable cost pools are allocated separately. What is the amount of fixed cost allocated to the Accounting Department for the month

Answer 1

The accounting Department allocate $222 dollar of fixed cost durign the month.

Step-by-step explanation:

the fixed cost will be allocate considering the expected copies for each departement:

30,000 technical

6,000 accounting:

36,000 total expected

$2,000 / 36,000 = 0,0555

Then, during the month the accounting department makes 4,000 copies

so it alllocate: 4,000 x 0.0555 = 222

Answer 2

Allocated overhead= $266.66

Step-by-step explanation:

The fixed machine cost would be allocated using an overhead absorption rate

OAR = Budgeted overhead for the period /Budgeted copies

= 2000/30,000

= $0.0667 per copy

Allocated overhead = OAR × actual copies produced

Allocated Overhead for Accounting department

= $0.0667 × 4,000

= $266.66