Question
Harry Dishman owns and operates Harry's Septic Service and Legal Advice. Harry's two revenue generating (production) operations are supported by two service departments: Clerical and
Harry Dishman owns and operates Harry's Septic Service and Legal Advice. Harry's two revenue generating (production) operations are supported by two service departments: Clerical and Janitorial. Costs in the service departments are allocated in the following order using the designated allocation bases: |
Clerical: |
Variable cost: expected number of work orders processed |
Fixed cost: long-run average number of work orders processed |
Janitorial: |
Variable cost: labor hours |
Fixed cost: square footage of space occupied |
Average and expected activity levels for next month (June) are as follows: |
No.of Work | Labor | Square | ||
Orders Expected | Average | Hours | Footage | |
Septic Service | 64 | 122 | 700 | 1,940 |
Legal Advice | 39 | 34 | 980 | 2,340 |
Clerical | 34 | 34 | 540 | 1,740 |
Janitorial | 19 | 34 | 340 | 1,140 |
Expected costs in the service departments for June are as follows:
Clerical | Janitorial | |
Variable Costs | $13,400 | $5,600 |
Fixed Costs | $ 9,800 | $ 2,200 |
Under the direct method of allocation, what is the total amount of service cost allocated to the Legal Advice operation for June? (Round all calculations to the nearest whole dollar.) |
$11,864.
$10,212.
$11,679.
$8,751.
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