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Biotechtron, Inc., has two research laboratories in the Southwest, one in Yuma, Arizona, and the other in Bernalillo, New Mexico. The owner of Biotechtron centralized
Biotechtron, Inc., has two research laboratories in the Southwest, one in Yuma, Arizona, and the other in Bernalillo, New Mexico. The owner of Biotechtron centralized the legal services function in the Yuma office and had both laboratories send any legal questions or issues to the Yuma office. The legal services support center has budgeted fixed costs of $157,000 per year and a budgeted variable rate of $70 per hour of professional time. The normal usage of the legal services center is 2,420 hours per year for the Yuma office and 1,980 hours per year for the Bernalillo office. This corresponds to the expected usage for the coming year. Required: 1. Determine the amount of legal services support center costs that should be assigned to each office. In your computations, carry ratio values out to two decimal places. Round your final answers to the nearest dollar if rounding is required. Yuma Bernalillo 2. Since the offices produce services, not tangible products, what purpose is served by allocating the budgeted costs? 3. Now, assume that during the year, the legal services center incurred actual fixed costs of $159,500 and actual variable costs of $270,500. It delivered 3,850 hours of professional time-2,380 hours to Yuma and 1,470 hours to Bernalillo. Determine the amount of the legal services center's costs that should be allocated to each office. Yuma 5 Bernalillo 4. Did the costs allocated differ from the costs incurred by the legal services center? If so, why
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