Jack Donaldson Owns and Operates Jack's Abstracting Service Required:
A

question 20

Essay

Jack Donaldson owns and operates Jack's Abstracting Service. Jack's two revenue generating operations Abstracting Services and Closing Services are supported by two service departments: Clerical and Custodial. Costs in the service departments are allocated in the following order using the designated allocation bases.
Clerical: number of transactions processed.
Custodial: square footage of space occupied.
Average and expected activity levels for next month are as follows:
$$\begin{array} { l r r r } & \begin{array} { c } \text { Number of } \\\text { Tramsactions }\end{array} & \begin{array} { c } \text { Square } \\\text { Footage }\end{array} & \begin{array} { c } \text { Expected } \\\text { Costs }\end{array} \\\text { Abstract services } & 50 & 1,800 & \\\text { Closing services } & 25 & 2,200 & \\\text { Clerical } & & 1,600 & \$ 40,000 \\\text { Custodial } & 5 & & 10,000\end{array}$$
Required:
a. Use the step method to allocate the service department costs to the revenue generating departments. Assume Clerical costs are allocated before Custodial costs and round all calculations to the nearest whole dollar. Provide the total costs for the revenue departments.
b. Use the step method to allocate the service department costs to the revenue generating departments but now assume Custodial costs are allocated before Clerical costs. Provide the total costs for the revenue departments.

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Definitions:

Richard Nixon

The 37th President of the United States, serving from 1969 until 1974, who is best known for his involvement in the Watergate scandal which led to his resignation.

Watergate Investigation

A major political scandal in the United States involving the administration of President Richard Nixon, following a break-in at the Democratic National Committee headquarters and subsequent efforts to cover it up.

Oval Office Recordings

Audio recordings made secretly in the Oval Office, most famously by President Richard Nixon, which led to his resignation in the wake of the Watergate scandal.

Geneva Accords

Agreements concluded in Geneva in 1954, which temporarily separated Vietnam into two zones, aiming to end hostilities in Indochina and pave the way for political negotiations.