Acct3333 Ch14 in-class soln 2010

Acct3333 Ch14 in-class soln 2010 - Chapter 14In-Class...

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Unformatted text preview: Chapter 14In-Class Solutions 14-17 (20 min.) Single-rate versus dual-rate methods, support department. Bases available (kilowatt hours): Rockford Peoria Hammond Kankakee Total Practical capacity Expected monthly usage 10,000 8,000 20,000 9,000 12,000 7,000 8,000 6,000 50,000 30,000 1a. Single-rate method based on practical capacity: Total costs in pool = $6,000 + $9,000 = $15,000 Practical capacity = 50,000 kilowatt hours Allocation rate = $15,000 50,000 = $0.30 per hour of capacity Rockford Peoria Hammond Kankakee Total Practical capacity in hours Costs allocated at $0.30 per hour 10,000 $3,000 20,000 $6,000 12,000 $3,600 8,000 $2,400 50,000 $15,000 1b. Single-rate method based on expected monthly usage: Total costs in pool = $6,000 + $9,000 = $15,000 Expected usage = 30,000 kilowatt hours Allocation rate = $15,000 30,000 = $0.50 per hour of expected usage Rockford Peoria Hammond Kankakee Total Expected monthly usage in hours Costs allocated at $0.50 per hour 8,000 $4,000 9,000 $4,500 7,000 $3,500 6,000 $3,000 30,000 $15,000 2. Variable-Cost Pool: Total costs in pool = $6,000 Expected usage = 30,000 kilowatt hours Allocation rate = $6,000 30,000 = $0.20 per hour of expected usage Fixed-Cost Pool: Total costs in pool = $9,000 Practical capacity = 50,000 kilowatt hours Allocation rate = $9,000 50,000 = $0.18 per hour of capacity 14-17 (contd) Rockford Peoria Hammond Kankakee Total Variable-cost pool $0.20 8,000; 9,000; 7,000, 6,000 Fixed-cost pool $0.18 10,000; 20,000; 12,000, 8,000 Total $1,600 1,800 $3,400 $1,800 3,600 $5,400 $1,400 2,160 $3,560 $1,200 1,440 $2,640 $ 6,000 9,000 $15,000 The dual-rate method permits a more refined allocation of the power department costs; it permits the use of different allocation bases for different cost pools. The fixed costs result from decisions most likely associated with the practical capacity level. The variable costs result from decisions most likely likely associated with the practical capacity level....
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Acct3333 Ch14 in-class soln 2010 - Chapter 14In-Class...

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