Stronghold, Inc For Purposes of Performance Evaluation, Fixed Costs Allocated to Brochure

question 85

Multiple Choice

Stronghold, Inc., operates a brochure business at two different locations. Stronghold, Inc., has one support department that is responsible for cleaning, service, and maintenance of its printing equipment. The costs of the support department are allocated to each brochure center on the basis of total brochures made. During the first month, the costs of the support department were expected to be $400,000. Of this amount, $120,000 is considered a fixed cost. During the month, the support department incurred actual variable costs of $256,000 and actual fixed costs of $144,000.
Normal and actual activity (brochures made) are as follows: $\begin{array}{lcc}& \text { Brochure Center 1 } & \text { Brochure Center 2 } \\\text { Normal activity (brochures) } & 1,200,000 & 800,000 \\\text { Actual activity (brochures) }& 1,000,000 & 880,000\end{array}$
For purposes of performance evaluation, fixed costs allocated to Brochure Center 2 are:

• A)$57,600.
• B)$120,000.
• C)$48,000.
• D)$102,400.

Convert cash basis accounting records to accrual basis.

Understand the effects of revenue and expenses on owners' equity.

Practice journalizing and posting transactions in T-accounts.

Recognize the necessity and process of adjusting entries.

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Definitions:

Sociological Construct

A concept or perception of an idea or object that is created through societal or cultural practices.

Variable

An attribute or characteristic that can assume different values or vary among individuals, entities, or across situations.

Grounded Theory

A research methodology used in social sciences to construct theories based on data systematically gathered and analyzed through a process of comparative analysis.

Alienation

A state within social interactions characterized by minimal integration or shared beliefs, alongside significant separation or detachment between people, or between a person and a collective.