Steven Parker owns and operates Steven's Septic Service and Legal Advice. Steven's two revenue generating...
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Accounting
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: No. of Work Orders Expected Average Labor Hours Square Footage Septic Service 50 80 560 1,800 Legal advice 25 20 840 2,200 Clerical 20 20 400 1,600 Janitorial 5 20 200 1,000 Expected costs in the service departments for June are as follows: Clerical Janitorial Variable costs $ 12,000 $ 4,200 Fixed costs $ 8,400 $ 800 Under the direct method of allocation, what is the total amount of service cost allocated to the Legal Advice operation for June? (Round all calculations to the nearest whole dollar.)
A. $6,231.
B. $7,720.
C. $8,640.
D. $9,330.
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