managerial accounting 6 6 421343

Exercise E6 6 Cost Allocation Process
Apex Company’s Copy Department, which does all of the photocopying for the Sales Department and the Administration Department, budgets
the following costs for the year, based on the expected activity of 5,000,000 copies.
Salaries (Fixed) $80,000
Employee benefits (Fixed) 10,000
Depreciation of copy machines (Fixed) 10,000
Utilities (Fixed) 5,000
Paper (Variable) Per copy: $0.01 50,000
Toner (Variable) Per copy: $0.01 50,000
The costs are assigned to two 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% to Sales and 60% to
Administration. The variable costs are assigned at a rate of $0.02 per copy.
Required:
Assuming 4,800,000 copies were made during the year, 2,500,000 for Sales and 2,300,000 for Administration, calculate
the Copy Department costs allocated to Sales and Administration.
Total costs to be allocated:
Title Amount
Title Amount
Title Amount
Title Amount
Total: Formula
Costs allocated to Sales:
Title Formula
Title Formula
Title Formula
Costs allocated to Admin:
Title Formula
Title Formula
Title Formula
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