FIGURE 7-4 Copies Plus Print Operates a Copy Business at Two

question 168

Multiple Choice

FIGURE 7-4 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:
Refer to Figure 7-4. For purposes of performance evaluation, fixed costs allocated to Copy Center 2 are

• A) $28,800.
• B) $60,000.
• C) $51,200.
• D) $24,000.

---

Definitions:

Expensive Advertisement

High-cost marketing activities aimed at promoting products, services, or brands to a wide audience.

Product-variety Externality

An economic condition where the diversity of products benefits consumers more than what is accounted for by the producers, leading to positive external effects in a market.

Business-stealing Externality

A business-stealing externality occurs when the entry of new businesses reduces the demand for existing businesses, potentially lowering profits without necessarily benefiting consumers.

Positive Externality

An advantage received by individuals without their active choice, commonly linked to communal goods or services.