The Barton Creek Company Has Three Client-Contact Departments: Market Research

question 69

Essay

The Barton Creek Company has three client-contact departments: Market Research, Branding, and Promotion. Each department requires the services of the Legal Department for the contracts that each undertakes. The size of the Legal Department was based on long-run estimates of contracts. Information on the Legal Department's budgeted and actual costs is as follows:
The budget for the Legal Department is $200,000 + $7.50/contract. The budgeted volume of contracts is as follows:
$$\begin{array} { | l | r |} \hline \text { Market Research } & 300 \\\hline \text { Branding } & 500 \\\hline \text { Promotion } & 700 \\\hline\end{array}$$
The actual number of contracts for Market Research was 286, for Branding was 450, and for Promotion was 675.
Required:
(Use three decimal places in your calculations.)
a. If a single charging rate based on budgeted usage is used, how much of the cost of the Legal Department would be allocated to each of the producing departments?
b. If a dual charging rate is used, how much of the cost of the Legal Department would be allocated to each of the producing departments?