Accounting Services, Inc. has two customers. Customer X generates $600,000 in income after direct fixed costs are deducted, and Customer Z generates $580,000 in income after direct fixed costs are deducted. Allocated fixed costs total $1,000,000 and are assigned 40 percent to Customer X and 60 percent to Customer Z. Total allocated fixed costs remain the same regardless of how these costs are assigned to customers.

What is the amount of allocated fixed costs to be assigned to Customer Z?

Group of answer choices

$580,000

$420,000

$400,000

$600,000

Exhibit 7-4

The following segmented annual income statement is for Paper Products, Inc.

Product Lines

Plain

Lined

Color

Total

Sales revenue

$25,000

$100,000

$125,000

$250,000

Variable costs

15,000

50,000

85,000

150,000

Contribution margin

$10,000

$50,000

$ 40,000

$100,000

Direct fixed costs

4,000

6,000

9,000

19,000

Allocated fixed costs

?

?

?

45,000

Profit (loss)

$ ?

$ ?

$ ?

$ ?

Refer to Exhibit 7-4. If allocated fixed costs are based on sales revenue for each product line as a proportion of total sales revenue, what is the profit or (loss) for Color?

Group of answer choices

$8,500

$16,000

$31,000

$13,000