Question 8 10 points Answer the following question with the data contained in Ta

Question

Question 8 10 points Answer the following question with the data contained in Table 1 below. Table 1. Profit Center Analysis New Construction Remodel Retrofit 00,000 350,000 Cost of Construction 600,000 4,000,00 3,200,000 630,000 620,000 00.000 620,000 Tetal Direct Cost Gross Profit Operating Expenses 350,000 150 Auto and Truck 150,000 60,000 237,000 100,000 Work-in Other Varsable Contributions 5,000 iatson (Auto and and T and Truck 20,000 44,000 0.000 453,000 Total Fixed OperatingE Tetal Operating Expese Net Profit By default base, what amount of Other Fixed Expense should be allocated to the profit center of New Construction? O1,000 O 5,000 O 7.000 3,000

Explanation / Answer

The correct answer in this case would be 7000. Typically fixed costs are not allocated on Revenue basis, but in the given case, we are allocating it based on the same as there is no fixed pool we can allocate it to

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