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single rate dual rate and practical capacity allocation perfection department store 4270133

Single-rate, dual-rate, and practical capacity allocation. Perfection Department Store has a new promotional program that offers a free gift-wrapping service for its customers. Perfection’s customer service department has practical capacity to wrap 7,000 gifts at a budgeted fixed cost of $6,650 each month. The budgeted variable cost to gift wrap an item is $0.40. Although the service is free to customers, a gift-wrapping service cost allocation is made to the department where the item was purchased. The customer-service department reported the following for the most recent month:

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