Biotechtron, Inc., has two research laboratories in the Midwest, one in Tulsa, Oklahoma, and one in Ames,
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1. Determine the amount of legal services support center costs that should be assigned to each office.
2. Since the offices produce services, not tangible products, what purpose is served by allocating the budgeted costs?
3. Now, assume that during the year, the legal services center incurred actual fixed costs of $59,000 and actual variable costs of $91,500. It delivered 2,300 hours of professional time—1,200 hours to Tulsa and 1,100 hours to Ames. Determine the amount of the legal services center’s costs that should be allocated to each office. Explain the purposes of this allocation.
4. Did the costs allocated differ from the costs incurred by the legal services center? If so, why?
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Related Book For
Cost Management Accounting and Control
ISBN: 978-0324559675
6th Edition
Authors: Don R. Hansen, Maryanne M. Mowen, Liming Guan
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