Reference no: EM132977958

Question - The Speedjet Aircraft 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 costs of operating the materials laboratory for 150,000 to 250,000 technician hours per year:

Fixed costs per year $8,600,000

Variable costs $75 per technician hour

Budgeted long-run usage in hours per year:

Large Plane Department 90,000 technician hours

Small Plane Department 160,000 technician hours

Budgeted amounts are used to calculate the allocation rates.

Actual usage for the year by the Large Plane Department was 70,000 technician hours and by the Small Plane Department was 90,000 technician hours.

What amount of materials laboratory costs will be budgeted for the Large Plane Department?

a. $9,846,000

b. $9,012,500

c. $7,658,000

d. $11,587,500