managerial accounting 6 6 421343

Exercise E6 6 Cost Allocation Process
Apex Company’s Copy Department, which does all of the photocopying for the Sales Department and the Administration Department, budgets
the following costs for the year, based on the expected activity of				5,000,000	copies.

		Salaries (Fixed)		$80,000
		Employee benefits (Fixed)		10,000
		Depreciation of copy machines (Fixed)		10,000
		Utilities (Fixed)		5,000
		Paper (Variable) Per copy:	$0.01	50,000
		Toner (Variable) Per copy:	$0.01	50,000

The costs are assigned to two pools, one for fixed and one for variable costs. The costs are then assigned to the Sales Department and the
Administrative Department. Fixed costs are assigned on a lump sum basis,				40%	to Sales and	60%	to
Administration. The variable costs are assigned at a rate of			$0.02	per copy.

*Required:*
Assuming	4,800,000	copies were made during the year,	2,500,000	for Sales and	2,300,000	for Administration, calculate
the Copy Department costs allocated to Sales and Administration.

		Total costs to be allocated:
		Title		Amount
		Title		Amount
		Title		Amount
		Title		Amount
		Total:		Formula

		Costs allocated to Sales:
		Title		Formula
		Title		Formula
		Title		Formula

		Costs allocated to Admin:
		Title		Formula
		Title		Formula
		Title		Formula