Copies Plus Print operates a copy business at two different locations. Copies Pl

Question

Copies Plus Print operates a copy business at two different locations. Copies Plus Print has one support department that is responsible for cleaning, service, and maintenance of its copying equipment. The costs of the support department are allocated to each copy center on the basis of total copies made. During the first month, the costs of the support department were expected to be $200,000. Of this amount, $60,000 is considered a fixed cost. During the month, the support department incurred actual variable costs of $128,000 and actual fixed costs of $72,000. Normal and actual activity (copies made) are as follows: ? Copy Center 1 Copy Center 2 Normal activity (copies) 600,000 400,000 Actual activity (copies) 500,000 440,000 ? For purposes of performance evaluation, fixed costs allocated to Copy Center 1 are: a. $30,000. b. $36,000. c. $37,600. d. $32,800.

Explanation / Answer

For purposes of performance evaluation, fixed costs allocated to Copy Center 1=60000/(600000+400000)*600000= $36000 Option B is correct

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