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NOTE: Please answer clearly. Thank you. eBook Allocation: Fixed and Variable Costs, Budgeted Fixed and Variable Costs Biotechtron, Inc., has two research laboratories in the
NOTE: Please answer clearly. Thank you.
eBook Allocation: Fixed and Variable Costs, Budgeted Fixed and Variable Costs 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 $160,000 per year and a budgeted variable rate of $65 per hour of professional time. The normal usage of the legal services center is 2,600 hours per year for the Yuma office and 1,400 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. Yuma $ 273,000 Bernalillo 147,000 2. Since the offices produce services, not tangible products, what purpose is served by allocating the budgeted costs? It serves the same purposes as costing out tangible products (e.g., pricing, profitability analysis, and performance evaluation). 3. Now, assume that during the year, the legal services center incurred actual fixed costs of $163,000 and actual variable costs of $272,400. It delivered 4,180 hours of professional time2,580 hours to Yuma and 1,600 hours to Bernalillo. Determine the amount of the legal services center's costs that should be allocated to each office. Yuma 140,000 X Bernalillo 160,000 4. Did the costs allocated differ from the costs incurred by the legal services center? Yes If so, why? Because the labs were charged based on budgeted costsStep by Step Solution
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