Stronghold, Inc Support Department Costs NOT Allocated to the Two Brochure Centers

question 135

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: $\begin{array}{lcc}& \text { Brochure Center 1 } & \text { Brochure Center 2 } \\\text { Normal activity (brochures) } & 1,200,000 & 800,000 \\\text { Actual activity (brochures) }& 1,000,000 & 880,000\end{array}$
Support department costs NOT allocated to the two brochure centers are:

• A)$16,800.
• B)$19,680.
• C)$44,000.
• D)$8,000.

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Definitions:

Current Liability

Obligations that a company needs to settle within one fiscal year or its current operating cycle, whichever is longer, often including accounts payable, short-term loans, and accrued expenses.

Accounts Payable

Amounts a company owes to creditors for items or services purchased on credit.

Mortgage Payable

A liability represented by a legal agreement granting a lender a lien on real estate property as security for the repayment of a loan.

Provisions

Liabilities of uncertain timing or amount, recognized on the financial statements for expected losses or expenses.