Question

Bradbo owned two adjoining restaurants, the Pork Palace and the Chicken Hut. Each restaurant was treated as a profit center for performance evaluation purposes. Although the restaurants had separate kitchens, they shared a central baking facility. The principal costs of the baking area included materials, supplies, labor, and depreciation and maintenance on the equipment.

Bradbo allocated the monthly costs of the baking facility to the two restaurants based on the number of tables served in each restaurant during the month using dual allocation and equal sharing of fixed costs. In April, the costs were $30,000, of which $16,000 were fixed. The Pork Palace served 4,400 tables, while the Chicken Hut served 3,600 tables.

The amount of joint cost that should have been allocated to the Pork Palace in April is calculated to be:

$8,000

$14,000

$15,700

$18,000

Answer 1

Answer:

$15,700

Explanation:

The computation of the joint cost is shown below:

= Allocated Variable Cost + half of the Fixed cost

where,

The Allocated variable cost would be

Variable cost = Total cost - fixed cost

                     = $30,000 - $16,000

                     = $14,000

Now the variable cost is

= Variable cost × number of tables in Pork Palace ÷ Total number of tables

= $14,000 × 4,400 tables ÷ 8,000 tables

= $7,700

The total number of tables would be

= 4,400 tables + 3,600 tables

= 8,000 table

And, the fixed cost is $8,000 as it was equal sharing

Now put these values to the above formula  

So, the value would equal to

= $7,700 + $8,000

= $15,700