Illumination Corporation Operates One Central Plant That Has Two Divisions

question 123

Multiple Choice

Illumination Corporation operates one central plant that has two divisions, the Flashlight Division and the Night Light Division. The following data apply to the coming budget year:

Assume that practical capacity is used to calculate the allocation rates.
Actual usage for the year by the Flashlight Division was 1400 hours and by the Night Light Division was 700 hours. If a single-rate cost-allocation method is used, what amount of operating costs will be budgeted for the Flashlight Division?

• A) $1,440,000
• B) $1,344,000
• C) $1,424,000
• D) $1,360,000

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Definitions:

Breakdowns

Refers to the failure of a system, process, machinery, or equipment, leading to a halt in operations or productivity.

Routine Inspections

Regular, scheduled examinations or checks of equipment, facilities, or processes to ensure they are in good condition and comply with standards.

Depot Service

A support service that repairs and maintains equipment at a central location outside the customer's premises.

Maintenance Department

A division within an organization responsible for the upkeep, repair, and smooth operation of equipment and facilities.