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Business, 23.04.2021 01:00 shonnybenskin8

Archery Equipment Corporation (AEC) manufactures lawn mowers in two divisions: Commercial and Consumer. Both divisions require the support of Product Development, an engineering service department that designs new products based on marketing data. The following annual information is available: Budgeted fixed costs of running Product Development $1,500,000 Budgeted variable cost of running Product Development per hour 120 Budgeted usage of Product Development Commercial Division 4,000 hours Consumer Division 3,500 hours Actual usage of Product Development Commercial Division 4,500 hours Consumer Division 3,000 hours Required: 1. Determine the allocation of Product Development costs to the two divisions using the single rate method where the actual hours of usage will be the allocation base. 2. Determine the allocation of Product Development costs to the two divisions using the dual rate method, assuming fixed costs use budgeted hours while variable costs use actual hours of usage as allocation bases.

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