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

question 70

Multiple Choice

Illumination Corp 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 1400 hours and by the Night Light Division was 700 hours.If a dual-rate cost-allocation method is used,what amount of cost will be allocated to the Night Light Division? Assume budgeted usage is used to allocate fixed operating costs and actual usage is used to allocate variable operating costs.

• A)$516,000
• B)$586,000
• C)$532,000
• D)$602,000

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Definitions:

Mutually Beneficial Exchanges

Transactions that provide advantages or gains to all parties involved.

Comparative Advantage

The competence of a person, business, or nation to manufacture a product or provide a service with a lesser opportunity cost compared to rivals.

Middlemen

Intermediaries in the distribution process that facilitate trade between producers and consumers by buying and selling products, often adding value in the process.