Question

Triton Company's copy department, which does almost all of the photocopying for the sales department and the administrative department, budgets the following costs for the year, based on the expected activity of copies: Salaries (fixed) $85,750 Employee benefits (fixed) 10,000 Depreciation of copy machines (fixed) 10,000 Utilities (fixed) 5,000 Paper (variable, 1 cent per copy) 50,000 Toner (variable, 1 cent per copy) 50,000 The costs are assigned to two cost pools, one for fixed and one for variable costs. The costs are then assigned to the sales department and the administrative department. Fixed costs are assigned on a lump-sum basis, 40 percent to sales and 60 percent to administration. The variable costs are assigned at a rate of 2 cents per copy. Assuming the following copies were made during the year, 2,752,750 for sales and 2,442,000 for administration, calculate the copy department costs allocated to sales. Round to two decimal places. Your Answer:

Answer 1

Variable Cost per copy = Paper + Toner
Variable Cost per copy = $0.01 + $0.01
Variable Cost per copy = $0.02

Total Fixed Costs = Salaries + Employee Benefits + Depreciation of Copy Machine + Utilities
Total Fixed Costs = $85,750 + $10,000 + $10,000 + $5,000
Total Fixed Costs = $110,750

Sales:

Number of copies = 2,752,750

Fixed Cost allocated = 40% * Total Fixed Costs
Fixed Cost allocated = 40% * $110,750
Fixed Cost allocated = $44,300

Variable Cost allocated = $0.02 * 2,752,750
Variable Cost allocated = $55,055

Total Cost allocated = Fixed Cost allocated + Variable Cost allocated
Total Cost allocated = $44,300 + $55,055
Total Cost allocated = $99,355