Check Company has several departments. One of those departments does only printing work for other departments of Check Company, and that department expects to print 1,000,000 documents for other departments at Check Company, and in producing those documents, expects to incur the following costs:
|
Salaries (fixed) |
$12,000 |
|
Employee benefits (fixed) |
$3,000 |
|
Depreciation (fixed) |
$3,000 |
|
Utilities (fixed) |
$1,000 |
|
Printing supplies (1 cent per document) |
$20,000 |
Costs are assigned to two cost pools, fixed costs and variable costs. The costs are then assigned to the Executive Department and the Administrative Department at Check Company. Fixed costs are assigned on a lump-sum basis, 30% to the Executive department and 70% to the Administrative Department. The variable costs are assigned at a rate of $0.02 per document printed.
If 800,000 documents are printed during 2011, 320,000 documents for the Executive Department and 480,000 documents for the Administrative Department, calculate the costs allocated to the Executive Department.
All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations. For problems, be sure to answer all questions and provide all requested information.
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