Answer the Following Question(s)using the Information Below

question 65

Multiple Choice

Answer the following question(s) using the information below:
The Fancy Flier Airplane 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 6,000 technician hours and by the Small Plane Department was 6,500 technician hours.
-If a dual-rate cost allocation method is used, what amount of materials laboratory costs will be budgeted for the Small Plane Department?

• A)$1,057,500
• B)$763,750
• C)$705,000
• D)$822,500
• E)$897,500

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Definitions:

Variable Cost Concept

An accounting principle that refers to costs that change in proportion to the level of activity or volume of production.

Rate of Return

The gain or loss of an investment over a specific period, expressed as a percentage of the investment's initial cost.

Production Bottleneck

A point in the manufacturing process where the flow of production is impeded, often leading to delays and reduced efficiency.

Constraint

A limitation or restriction that affects the planning or execution of strategies in business or any other context.