A Company Incurred $40,000 of Common Fixed Costs and $60,000

Short Answer

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: $$\begin{array} { c c c } & \text { Capacity Provided } & \text { Capacity Used } \\\text { Department } & \text { in Hours } & \text { in Hours } \\\text { A } & 400 & 320 \\\text { B } & 240 & 320\end{array}$$ 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.What are the fixed and variable costs allocated to Department A?
$\begin{array}{lll}&&\text { Fixed}&\text { Variable }\end{array}$
A) $\begin{array}{lll}& \$ 20,000 & \$ 30,000 \\\end{array}$
B) $\begin{array}{lll} & \$ 20,000 & \$ 37,500 \\\end{array}$
C) $\begin{array}{lll} & \$ 25,000 & \$ 30,000 \\\end{array}$
D) $\begin{array}{lll}& \$ 25,000 & \$ 37,500\end{array}$