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: $\begin{array}{lll}&\text { Copy Center } 1 &\text { Copy Center 2 }\
\text { Normal activity (copies) } & 600,000 & 400,000 \
\text { Actual activity (copies) } & 500,000 & 440,000
\end{array}$
Support department costs NOT allocated to the two copy centers are:
A)$22,000.
B)$9,840.
C)$8,400.
D)$6,000.

Question

Quizplus · Accepted Answer

The total actual costs of the support department are $200,000 ($128,000 variable + $72,000 fixed). The allocation rate is based on normal activity: $200,000 / 1,000,000 copies = $0.20 per copy. Actual copies made are 940,000, so allocated costs are $188,000 (940,000 * $0.20). The unallocated costs are $200,000 - $188,000 = $12,000. However, the fixed costs were $72,000 instead of $60,000, so the unallocated amount is $12,000 - $3,600 (extra fixed cost) = $8,400.

Copies Plus Print Operates a Copy Business at Two Different