Use the following information for the next 3 questions.
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 feet are used for janitorial support costs. A breakdown of their costs, along with other operating information, is shown below for a recent accounting period:
-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 foot
B) $0.61 per square foot
C) $0.70 per square foot
D) None of the above

Question

Use the following information for the next 3 questions.
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 feet are used for janitorial support costs. A breakdown of their costs, along with other operating information, is shown below for a recent accounting period: 
-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 foot 
B) $0.61 per square foot 
C) $0.70 per square foot 
D) None of the above

Quizplus · Accepted Answer

The variable cost allocation rate is calculated by dividing the total variable costs by the total square footage. If the total variable costs are $50,000 and the total square footage is 100,000, the rate is $0.50 per square foot.

Use the Following Information for the Next 3 Questions