Xi Print Operates a Copy Business at Two Different Locations

question 53

Multiple Choice

Xi Print operates a copy business at two different locations. Xi 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 centre 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:

$\begin{array}{lll}&\text { Copy Centre } 1&\text { Copy Centre } 2\\\text { Normal activity (copies) } & 600,000 & 400,000 \\\text { Actual activity (copies) } & 500,000 & 440,000\end{array}$
-Refer to the figure.What support department costs are NOT allocated to the two copy centres?

• A)$6,000
• B)$8,400
• C)$9,840
• D)$22,000

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Definitions:

Marginal Cost

The change in total cost that arises when the quantity produced is incremented by one unit, indicating the cost of producing one more item.

Total Variable Cost

The sum of all costs that vary with the level of output, including things like raw materials, labor costs that vary with production volume.

Output Increases

A situation where a firm or economy produces a greater quantity of goods or services.

Total Variable Cost

The sum of expenses that vary directly with the level of production output, excluding any fixed costs.