Exam 20: Performance Measurement in Decentralized Organizations

Hilbun Corporation has two operating divisions-an Atlantic Division and a Pacific Division. The company's Logistics Department services both divisions. The variable costs of the Logistics Department are budgeted at $34 per shipment. The Logistics Department's fixed costs are budgeted at $371,700 for the year. The fixed costs of the Logistics Department are determined based on peak-period demand. How much Logistics Department cost should be charged to the Atlantic Division at the end of the year for performance evaluation purposes?

Kosek Corporation's Maintenance Department provides services to the company's two operating divisions-the Paints Division and the Stains Division. The variable costs of the Maintenance Department are budgeted based on the number of cases produced by the operating departments. The fixed costs of the Maintenance Department are determined based on the number of cases produced by the operating departments during the peak period. Data appear below: Required: a. Prepare a report showing how much of the Maintenance Department's costs should be charged to each of the operating divisions at the end of the year. b. How much of the actual Maintenance Department costs should not be charged to the operating divisions at the end of the year? Who should be held responsible for these uncharged costs?

How much of the actual fixed maintenance cost for the year should be kept in the Maintenance Department and not allocated to the other departments for performance evaluation purposes?

The fixed costs of Baxter Company's personnel department are allocated to operating departments on the basis of direct labor-hours. The following data have been provided: The fixed costs of the personnel department are budgeted at $56,000 per year and are incurred in order to support long-run average requirements. How much of this fixed cost should be charged to Operating Department X at the end of the year for performance evaluation purposes?

Zindell Corporation has two operating divisions-a North Division and a South Division. The company's Logistics Department services both divisions. The variable costs of the Logistics Department are budgeted at $33 per shipment. The Logistics Department's fixed costs are budgeted at $369,200 for the year. The fixed costs of the Logistics Department are determined based on peak-period demand. At the end of the year, actual Logistics Department variable costs totaled $307,050 and fixed costs totaled $374,720. The North Division had a total of 3,900 shipments and the South Division had a total of 5,000 shipments for the year. Required: a. Prepare a report showing how much of the Logistics Department's costs should be charged to each of the operating divisions at the end of the year. b. How much of the actual Logistics Department costs should not be charged to the operating divisions at the end of the year? Who should be held responsible for these uncharged costs?

Dunkle Corporation's Maintenance Department provides services to the company's two operating divisions-the Paints Division and the Stains Division. The variable costs of the Maintenance Department are budgeted based on the number of cases produced by the operating departments. The fixed costs of the Maintenance Department are budgeted based on the number of cases produced by the operating departments during the peak period. Data appear below: For performance evaluation purposes, how much Maintenance Department cost should be charged to the Paints Division at the end of the year?

How much fixed maintenance cost should be charged to the Assembly Department at the end of the year for purposes of measuring performance?

How much variable Freight Department costs should be charged to the Salina Plant at the end of the year for performance evaluation purposes?

How much of the actual Freight Department cost should not be charged to either plant at the end of the year for performance evaluation purposes?

How much actual Logistics Department cost should not be allocated to the operating divisions at the end of the year?

How much Order Fulfillment Department cost should be allocated to the Commercial Division at the end of the year?

All of a service department's actual costs should be allocated or charged to operating departments to ensure that they are fully recovered.

How much of the actual Housekeeping Department costs should not have been charged to the operating departments for performance evaluation purposes?

Piedmont Company has one service department and three operating departments. During a particular year, a substantial variance developed between the actual costs and the budgeted costs of the service department. For performance evaluation purposes, the variance should be:

For performance evaluation purposes, variable costs of service departments should be charged to operating departments at the end of the period on the basis of:

How much fixed Freight Department costs should be charged to the Emory Plant at the end of the year for performance evaluation purposes?

Herriott Corporation has two operating divisions-an Atlantic Division and a Pacific Division. The company's Logistics Department services both divisions. The variable costs of the Logistics Department are budgeted at $43 per shipment. The Logistics Department's fixed costs are budgeted at $209,000 for the year. The fixed costs of the Logistics Department are determined based on peak-period demand. At the end of the year, actual Logistics Department variable costs totaled $246,960 and fixed costs totaled $217,870. The Atlantic Division had a total of 3,000 shipments and the Pacific Division had a total of 2,600 shipments for the year. For performance evaluation purposes, how much actual Logistics Department cost should NOT be charged to the operating divisions at the end of the year?

Janner Corporation has two operating divisions-a Consumer Division and a Commercial Division. The company's Order Fulfillment Department provides services to both divisions. The variable costs of the Order Fulfillment Department are budgeted at $79 per order. The Order Fulfillment Department's fixed costs are budgeted at $302,500 for the year. The fixed costs of the Order Fulfillment Department are determined based on the peak period orders. At the end of the year, actual Order Fulfillment Department variable costs totaled $446,016 and fixed costs totaled $320,930. The Consumer Division had a total of 1,540 orders and the Commercial Division had a total of 3,980 orders for the year. For purposes of evaluation performance, how much Order Fulfillment Department cost should be charged to the Commercial Division at the end of the year?

How much Housekeeping Department cost should have been charged to Packaging at the end of last year for performance evaluation purposes?

Norgaard Corporation has two operating divisions: a Consumer Division and a Commercial Division. The company's Customer Service Department provides services to both divisions. The variable costs of the Customer Service Department are budgeted at $70 per order. The Customer Service Department's fixed costs are budgeted at $245,000 for the year. The fixed costs of the Customer Service Department are determined based on the peak period orders. At the end of the year, actual Customer Service Department variable costs totaled $348,920 and fixed costs totaled $259,790. The Consumer Division had a total of 1,520 orders and the Commercial Division had a total of 3,360 orders for the year. For performance evaluation purposes, how much actual Customer Service Department cost should NOT be charged to the operating divisions at the end of the year?