Biology Forums - Study Force

Barrel Company's power plant provides electricity for its two operating departments, A and B. The year 2015 budget for the power plant shows:

   Budgeted fixed costs   $107,200
   Budgeted variable costs
   per kilowatt hour (kwh)   $0.05
   
   Additional data for 2015:

   Budget      Actual
   (kwh)      (kwh)
   Department A   490,000   525,000
   Department B   180,000   165,000

   Actual power plant costs: fixed $132,000, variable $41,400

   Budgeted rates are used in the allocation of electricity cost.

Required:
a.   Compute the power plant costs allocated to A and B using the single-rate method with    budgeted usage as the allocation base.
b.   Compute the power plant costs allocated to A and B using the dual-rate method with actual usage as the allocation base for variable costs and budgeted usage as the allocation base for fixed costs.
c.   From the standpoint of Departments A and B, what are the two main benefits of the dual-rate method?
d.   Calculate the variable overhead efficiency variances for each department. Who would be the appropriate person(s) to provide information on the causes of these variances?

Content hidden