Harry Dorffman owns and operates Harry's Abstracting Service. Harry's two revenue generating operations (Abstracting Services and Closing Services) are supported by two service departments: Clerical and Custodial. Costs in the service departments are allocated in the following order using the designated allocation bases.
Clerical: number of transactions processed
Custodial: square footage of space occupied
Average and expected activity levels for next month are as follows:
Required:
Use the direct method to allocate the service department costs to the revenue generating departments. Provide the total costs for the revenue departments.