John's Custom Computer Shop (JCCS) assembles computers for both individual and corporate customers. The company is organized into two divisions Personal and Business. Once a computer is built, it is shipped to the customer. Billing for all customers is handled by the corporate Accounts Receivable Department. Accounts Receivable performs two major activities: billing and dispute resolution. Biling refers to preparing and sending the bills as well as processing the payments. Dispute resolution occurs when a customer refuses to pay, usually due to an error in billing The costs of the Accounts Receivable Department are allocated to the two divisions based on the number of bills prepared Kyle, the manager of the business division, has complained that the allocated costs from Accounts Receivable are beginning to make the business division look unproftable and has asked you to recommend some changes to the allocation system. If he agrees with your recommendation, he will pass them on to the chief financial officer Data on costs and activities in the Accounts Receivable Department follow Number of bills prepared Number of disputes Personal 650 60 350 10 1,000 70 The Accounts Receivable department incurred the following costs during the year Billing Dispute resolution Total S 50,000 35,000 $ 85,000 Required: a. Under the current allocation system, what is the cost that wll be allocated from Accounts Recevable to Personal? To Business? (Do not round intermediate calculations.) a Business Allocated costs b. Suppose the company implements an activity-based cost system tor Accounts Receivable with two activities, biling and dispute resolution. What is the cost that wil be allocated from Accounts Receivable to Personar? To Business?r use the number of bilis prepared as the cost driver for billing costs and the number of disputes for dispute resolution costs Personal Business Billing Dispute resolution