Sanilac County has a lease on a lawn mower for $2500 per month and $.02 per minute of operation. Operating costs for fuel, oil, technicians, and so on are all variable at $.03 per minute. Departments had projected a need for 100,000 minutes per month. The county planning department predicted its usage at 36,000 minutes per month. The lawn mower was actually operated 42,000 minutes in 2011.
--Calculate one predetermined rate per minute to allocate all lawnmower usage. How much should be allocated to the city department this month?
--Now, assume that fixed and variable costs were allocated separately. How should each pool be allocated? What is the total cost to be allocated to the city department with this method?