A Company Incurred $120,000 of Common Fixed Costs and $180,000

question 25

Short Answer

A company incurred $120,000 of common fixed costs and $180,000 of common variable costs.These costs are to be allocated to Departments XX and YY.Data on capacity provided and capacity used are as follows: $$\begin{array} { c c c } & \text { Capacity Pravided } & \text { Capacity Used } \\\text { Department }& \text { in Hours } & \text { in Hours } \\ \text { XX } & 500 & 400\\\text { YY }&300&400\end{array}$$

Assume that both fixed and variable costs are allocated on the basis of capacity used.What are the fixed and variable costs allocated to Department XX?
$\begin{array}{llcc} &\text { Fixed } & \text {Variable } \\\end{array}$
A) $\begin{array}{llcc}\$ 60,000 & \$ 90,000 \\\end{array}$
B) $\begin{array}{llcc} \$ 60,000 & \$ 112,500\\\end{array}$
C) $\begin{array}{llcc} \$ 75,000 & \$ 90,000\\\end{array}$
D) $\begin{array}{llcc} \$ 75,000& \$ 112,500 \\\end{array}$

---

Definitions:

Compounded Monthly

The process of earning interest on both the original deposit and the accumulated interest from previous periods, calculated on a monthly basis.

Trust Fund

A legal arrangement in which assets are held by a third party for the benefit of another party or parties.

Compounded Quarterly

A financial term meaning the interest earned on an investment is calculated and added to the principal every three months, leading to the interest earning interest in subsequent quarters.

Monthly Payments

Regular amounts paid every month, usually in the context of loans or subscriptions.