Illumination Corporation Operates One Central Plant That Has Two Divisions,the

question 103

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:
Budgeted costs of operating the plant for 2000 to 3000 hours:

Budgeted long-run usage per year:

Assume that practical capacity is used to calculate the allocation rates.
Actual usage for the year by the Flashlight Division was 1500 hours and by the Night Light Division was 800 hours.If a single-rate cost-allocation method is used,what amount of cost will be allocated to the Flashlight Division? Assume actual usage is used to allocate operating costs.

• A)$2,050,000
• B)$1,850,000
• C)$1,200,000
• D)$1,537,500

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Definitions:

Product Service

A combination of tangible goods and intangible services provided to fulfill the needs or desires of consumers.

Place Utility

The value added to products by having them available at a place where they are needed or wanted by consumers.

Consumers

Individuals or businesses that purchase goods or services.

Quality Grades

Standardized classifications used to rate the quality of products based on specific criteria.