Sep 25, 2017 term paper 2

THE ALEX MILLER CORPORATION OPERATES ONE CENTRAL PLANT THAT HAS TWO DIVISIONS, THE FLASHLIGHT…

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The Alex Miller Corporation operates one central plant that has two divisions, the Flashlight Division and the Night Light Division. The following data apply to the coming budget year:

Budgeted costs of the operating the plant

for 10,000 to 20,000 hours:

Fixed operating costs per year $240,000

Variable operating costs $10 per hour

Practical capacity 20,000 hours per year

Budgeted long-run usage per year:

Lamp Division 800 hours × 12 months = 9,600 hours per year

Flashlight Division 450 hours × 12 months = 5,400 hours per year

Assume that practical capacity is used to calculate the allocation rates. Further assume that actual usage of the Lamp Division was 700 hours and the Flashlight Division was 400 hours for the month of June.


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