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The Cleveland power plant that services all manufacturing depariments of MidWest Engineering has a budget for the corming year. This budget has been expressed in the following nonthly terms: E (Click the icon to view the budgeted data.) The expected monthly costs for operating the power plant during the budget year are $25,900: $14,000 variable and $11,900 fixed. Read the requirements. Requirement 1. Assume that a single cost pool is used for the power plant costs. What budgeted amounts will be allocated to each manufacturing department if (a) the rate is calculated based on practical capacity and costs are allocated based on praclical capacity and (b) the rate is calculated based on expected monthly usage and costs are allocated based on expected monthly usage? (Round the budgeted rate to the nearest cent.) (a) (b) Budgeled rate per hour: Livonia Warren Dearborn Westland Total Requirement 2. Assume the dual-rate method is used with separate cost pools for the variable and fixed costs. Variable costs are allocated on the basis of expected monthly usage. Fixed costs are allocated on the basis of practical capacity. What budgeted amounts will be allocated to each manufacturing department? Why might you prefer the dual-rate method? Begin by calculating the budgeted amounts that will be allocated to each manufacturing department. Variable Fixed Total - X Budgeted rate per hour: Data table Livonia Manufacturing Department Needed at Practical Capacity Production Level (Kilowatt-Hours) Average Expected Monthly Usage (Kilowatt-Hours) Warren Dearbom Livonia 12,000 17,000 Westland Warren 25,000 15,000 Dearborn 15,000 19,000 Total 18,000 19,000 Westland Why might you prefer the dual-rate method? 70,000 70,000 Total

The Cleveland power plant that services all manufacturing depariments of MidWest Engineering has a budget for the corming year. This budget has been expressed in the following nonthly terms: E (Click the icon to view the budgeted data.) The expected monthly costs for operating the power plant during the budget year are $25,900: $14,000 variable and $11,900 fixed. Read the requirements. Requirement 1. Assume that a single cost pool is used for the power plant costs. What budgeted amounts will be allocated to each manufacturing department if (a) the rate is calculated based on practical capacity and costs are allocated based on praclical capacity and (b) the rate is calculated based on expected monthly usage and costs are allocated based on expected monthly usage? (Round the budgeted rate to the nearest cent.) (a) (b) Budgeled rate per hour: Livonia Warren Dearborn Westland Total Requirement 2. Assume the dual-rate method is used with separate cost pools for the variable and fixed costs. Variable costs are allocated on the basis of expected monthly usage. Fixed costs are allocated on the basis of practical capacity. What budgeted amounts will be allocated to each manufacturing department? Why might you prefer the dual-rate method? Begin by calculating the budgeted amounts that will be allocated to each manufacturing department. Variable Fixed Total - X Budgeted rate per hour: Data table Livonia Manufacturing Department Needed at Practical Capacity Production Level (Kilowatt-Hours) Average Expected Monthly Usage (Kilowatt-Hours) Warren Dearbom Livonia 12,000 17,000 Westland Warren 25,000 15,000 Dearborn 15,000 19,000 Total 18,000 19,000 Westland Why might you prefer the dual-rate method? 70,000 70,000 Total

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter5: Support Department And Joint Cost Allocation
Section: Chapter Questions
Problem 2CMA: Adam Corporation manufactures computer tables and has the following budgeted indirect manufacturing...
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The Cleveland power plant that services all manufacturing depariments of MidWest Engineering has a budget for the corming year. This budget has been expressed in the following nonthly terms: E (Click the icon to view the budgeted data.) The expected monthly costs for operating the power plant during the budget year are $25,900: $14,000 variable and $11,900 fixed. Read the requirements. Requirement 1. Assume that a single cost pool is used for the power plant costs. What budgeted amounts will be allocated to each manufacturing department if (a) the rate is calculated based on practical capacity and costs are allocated based on praclical capacity and (b) the rate is calculated based on expected monthly usage and costs are allocated based on expected monthly usage? (Round the budgeted rate to the nearest cent.) (a) (b) Budgeled rate per hour: Livonia Warren Dearborn Westland Total Requirement 2. Assume the dual-rate method is used with separate cost pools for the variable and fixed costs. Variable costs are allocated on the basis of expected monthly usage. Fixed costs are allocated on the basis of practical capacity. What budgeted amounts will be allocated to each manufacturing department? Why might you prefer the dual-rate method? Begin by calculating the budgeted amounts that will be allocated to each manufacturing department. Variable Fixed Total - X Budgeted rate per hour: Data table Livonia Manufacturing Department Needed at Practical Capacity Production Level (Kilowatt-Hours) Average Expected Monthly Usage (Kilowatt-Hours) Warren Dearbom Livonia 12,000 17,000 Westland Warren 25,000 15,000 Dearborn 15,000 19,000 Total 18,000 19,000 Westland Why might you prefer the dual-rate method? 70,000 70,000 Total
Transcribed Image Text:The Cleveland power plant that services all manufacturing depariments of MidWest Engineering has a budget for the corming year. This budget has been expressed in the following nonthly terms: E (Click the icon to view the budgeted data.) The expected monthly costs for operating the power plant during the budget year are $25,900: $14,000 variable and $11,900 fixed. Read the requirements. Requirement 1. Assume that a single cost pool is used for the power plant costs. What budgeted amounts will be allocated to each manufacturing department if (a) the rate is calculated based on practical capacity and costs are allocated based on praclical capacity and (b) the rate is calculated based on expected monthly usage and costs are allocated based on expected monthly usage? (Round the budgeted rate to the nearest cent.) (a) (b) Budgeled rate per hour: Livonia Warren Dearborn Westland Total Requirement 2. Assume the dual-rate method is used with separate cost pools for the variable and fixed costs. Variable costs are allocated on the basis of expected monthly usage. Fixed costs are allocated on the basis of practical capacity. What budgeted amounts will be allocated to each manufacturing department? Why might you prefer the dual-rate method? Begin by calculating the budgeted amounts that will be allocated to each manufacturing department. Variable Fixed Total - X Budgeted rate per hour: Data table Livonia Manufacturing Department Needed at Practical Capacity Production Level (Kilowatt-Hours) Average Expected Monthly Usage (Kilowatt-Hours) Warren Dearbom Livonia 12,000 17,000 Westland Warren 25,000 15,000 Dearborn 15,000 19,000 Total 18,000 19,000 Westland Why might you prefer the dual-rate method? 70,000 70,000 Total
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