Dual-rate method, budgeted versus actual costs and quantities (continuation of 15-17). Chocolat Inc. decides to examine the effect of using the dual-rate method for allocating truck costs to each roundtrip. At the start of 2013, the budgeted costs were as follows:
Variable cost per round-trip $ 1,350
Fixed costs $47,500
The actual results for the 45 round-trips made in 2013 were as follows:
Assume all other information to be the same as in Exercise 15-17.
1. Using the dual-rate method, what are the costs allocated to the dark chocolate division and the milk chocolate division when (a) variable costs are allocated using the budgeted rate per round-trip and actual round-trips used by each division and when (b) fixed costs are allocated based on the budgeted rate per round-trip and round-trips budgeted for each division?
2. From the viewpoint of the dark chocolate division, what are the effects of using the dual-rate method rather than the single-rate method?
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