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Question - Corporation "Victor" operates one central plant that has two divisions: Division 1 and Division 2 Budgeted costs of the operating plant for 10,000 to 20,000 hours: $260,000
Fixed operating cost 100 per hour
Variable Operating costs 2,000 hours
Practical capacity
Budgeted long-run usage:
Division 1 800 hours per year
Division 2 500 hours per year
Assume that practical capacity is used to calculate the allocation rates. Further assume that actual usage of the Division 1 was 700 hours
If dual-rate cost-allocation method is used, what amount of cost will be allocated to the Division 1? To the Division 2?
a. none
b. 70,000 and 105,000
c. 174,000 and 105,000
d. 17,400 and 9,850
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