The Product Data Centre Has Been Servicing the Billabong Casting

Essay

The Product Data centre has been servicing the Billabong Casting Department for five years.Beginning next year,the company is adding a Billabong Moulding Department to complement the materials produced by the Billabong Casting Department.As a result,data centre costs are expected to increase from $950 000 per year to $1 150 000 per year.The Billabong Moulding Department will use 20% of the data centre efforts.
Required:
a.Using the stand-alone cost-allocation method,identify the amount of data centre cost that will be allocated to Billabong Casting and the Billabong Moulding Department next year.
b.Using the incremental cost-allocation method,identify the amount of data centre cost that will be allocated to Billabong Casting and the Billabong Moulding Department next year.
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