A company incurred $40,000 of common fixed costs and $60,000 of common variable costs. These costs are to be allocated to Departments A and B. Data on capacity provided and capacity used are as follows:
Capacity Provided Capacity Used Department in Hours in Hours
A 800 640
B 480 640
Assume that common fixed costs are to be allocated to Departments A and B on the basis of capacity provided and that common variable costs are to be allocated to Departments A and B on the basis of capacity used.
a) calculate the fixed and
b) variable costs allocated to Department A