Steven Parker Owns and Operates Steven's Septic Service and Legal

question 15

Multiple Choice

Steven Parker owns and operates Steven's Septic Service and Legal Advice.Steven's two revenue generating (production) operations are supported by two service departments: Clerical and Janitorial.Costs in the service departments are allocated in the following order using the designated allocation bases: Clerical:
Variable cost: expected number of work orders processed
Fixed cost: long-run average number of work orders processed
Janitorial:
Variable cost: labor hours
Fixed cost: square footage of space occupied
Average and expected activity levels for next month (June) are as follows:

Expected costs in the service departments for June are as follows:
$$\begin{array} { | l | r | r | } \hline & \text { Clerical } & \text { Janitorial } \\\hline \text { Variable costs } & \$ 12,000 & \$ 4,200 \\\hline \text { Fixed costs } & \$ 8,400 & \$ 800 \\\hline\end{array}$$ Under the step method of allocation,how much Clerical service cost should be allocated to the Septic Service operation for June? (Assume Clerical costs are allocated before Janitorial costs and round all calculations to the nearest whole dollar. )

• A) $12,689.
• B) $13,100.
• C) $13,620.
• D) $15,596.

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Definitions:

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