Question

The annual operating expense of running a copy center is shared by the three departments that use its service: Human resource, Accounting, and Legal. Last year, the copy center incurred $30,000 while HR copied 20,000 pages, Accounting 30,000 pages, and Legal 50,000 pages. What was Accounting department’s share of the copy center cost?

Answer 1

$9,000.

Step-by-step explanation:

In this instance we will use each department's use of the copy center as a basis of cost allocation. This will help assign cost based on departmental usage.

The department that used the copy center more will incur more cost and vice versa.

HR copied 20,000 pages, Accounting 30,000 pages, and Legal 50,000 pages. So if we want to find out the Accounting department’s share of the copy center cost

Total pages copied= 20,000 + 30,000 + 50,000

Total pages copied= 100,000 pages

Cost per page copied = Total cost ÷ Total pages

Cost per page copied= 30,000 ÷ 100,000= $0.3

Therefore

Cost for Accounting department= Unit cost * Number of pages

Cost for Accounting department= 0.3 * 30,000

Cost for Accounting department= $9,000