Question
Peridot, Inc., operates a consultation business at two different locations. Peridot has one support department that is responsible for administration, service, and maintenance of its
Peridot, Inc., operates a consultation business at two different locations. Peridot has one support department that is responsible for administration, service, and maintenance of its premises. The costs of the support department are allocated to each location on the basis of hours spent.
During the first month, the costs of the support department were expected to be $87,750. Of this amount, $27,000 is considered a fixed cost. During the month, the support department incurred actual variable costs of $55,500 and actual fixed costs of $32,000.
Normal and actual activity levels for the month of August are as follows:
Location 1 | Location 2 | |
Normal activity (Hours) | 3,750 | 3,000 |
Actual activity (Hours) | 3,200 | 2,800 |
Required:
a. | For purposes of performance evaluation, calculate the fixed costs allocated to Location 1. |
b. | For purposes of performance evaluation, calculate the fixed costs allocated to Location 2. |
c. | Calculate the support department costs not allocated to the two locations. |
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