PIR Corporation Has 2 Support Departments and 2 Operating Departments

question 129

Multiple Choice

PIR Corporation has 2 support departments and 2 operating departments. Number of employees is used as an allocation base for personnel support costs, and square metres are used for janitorial support costs. A breakdown of their costs, along with other operating information, is shown below for a recent accounting period: Support Departments Operating Departments
Personnel Janitorial Assembly Finishing
Direct Costs:
Fixed $ 8,000 $ 4,000 $ 3,000 $ 4,000
Variable 6,000 10,000 12,000 6,000
Total $14,000 $14,000 $15,000 $10,000
Number of employees 10 15 30 20
Square metres 3,000 5,000 10,000 10,000
If PIR uses dual-rate allocation and the direct method, the variable cost allocation rate for janitorial services will be:

• A)$0.50 per square metre
• B)$0.61 per square metre
• C)$0.70 per square metre
• D)None of the above

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