The Speedjet Aircraft Corporation Has a Central Materials Laboratory

question 145

Multiple Choice

The Speedjet Aircraft 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 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 80,000 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 laboratory costs.

• A) $10,228,571.4
• B) $8,960,000
• C) $7,671,429
• D) $6,720,000

---

Definitions:

Long-term Notes

Debt obligations with a maturity of more than one year, used by companies to finance operations or major purchases.

Multiple Lenders

A situation where a borrower has loans or credit lines from more than one lender at the same time.

Bond Financing

Raising capital through the issuance of bonds, which are debt securities that obligate the issuer to pay interest to holders and repay the principal at maturity.

Equity Financing

The method of raising capital by selling company shares to investors, thereby exchanging ownership rights for cash investments.