CostExercise15

CostExercise15 - Ahmed Souary 15-16 Single-rate versus...

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Ahmed Souary 15-16 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 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
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This note was uploaded on 06/23/2011 for the course BUS 2B taught by Professor Hayle during the Spring '11 term at El Camino.

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CostExercise15 - Ahmed Souary 15-16 Single-rate versus...

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