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- Steven Parker owns and operates Steven's Septic Service and Legal Advice. Steven's two revenue generating (production) operations are supported by two service departments: Clerical
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Steven Parker owns and operates Steven's Septic Service and Legal Advice. Steven'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 Orders Expected 50 Septic Service Legal advice Clerical Janitorial 25 20 5. Average 80 20 20 20 Labor Hours 720 1,000 560 360 Square Footage 1,960 2,360 1,760 1,160 Expected costs in the service departments for June are as follows: Variable costs Fixed costs clerical Janitorial $13,600 $5,800 $10,200 $ 960 Under the step method of allocation, how much Clerical Service cost should be allocated to the Septic Service operation for June? (Assume Clerical costs are allocated before Janitorial costs and round all calculations to the nearest whole dollar.) Multiple Choice 0 $14,609. 0 $15,300. 0 $15,980 Step by Step Solution
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