Exam 23: Service Department Charges

(Appendix 12B)Layton Company operates a free day-care center for the benefit of its employees.The company subsidizes the day-care center heavily and charges only a very nominal fee to employees using the center services.Budgeted and actual costs in the day-care center for the most recent year are as follows: The variable costs of the day-care center are charged to operating departments on the basis of employees in their departments.Data concerning these operating departments follow: The level of budgeted fixed costs in the day-care center is determined by the peak-period requirements. Required: a.Compute the dollar amount of the variable and fixed costs that should have been charged to each of the operating departments at the end of the year for purposes of evaluating performance. b.Identify the amount, if any, of actual costs that should not be charged to the operating departments for performance evaluation purposes.

(Appendix 12B)Jui 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?

(Appendix 12B)Charges for service department costs to operating departments should be based on the actual variable costs and the budgeted fixed costs of the service department.

(Appendix 12B)Service department costs should not be separated into fixed and variable costs when charging operating departments for their services.

(Appendix 12B)Yacavone 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 $43 per order.The Customer Service Department's fixed costs are budgeted at $274, 400 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 $216, 090 and fixed costs totaled $292, 890.The Consumer Division had a total of 1, 310 orders and the Commercial Division had a total of 3, 590 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?

(Appendix 12B)Soland 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 $46 per shipment.The Logistics Department's fixed costs are budgeted at $253, 700 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 $342, 000 and fixed costs totaled $273, 230.The Atlantic Division had a total of 4, 400 shipments and the Pacific Division had a total of 2, 800 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?

(Appendix 12B)Lopez Company has a purchasing department that provides services to a factory located in Muncie and another in North Bend.Budgeted costs for the purchasing department consist of $72, 000 per year of fixed costs and $5 per purchase order for variable costs. The level of budgeted fixed costs is determined by peak-period requirements.The Muncie factory requires 4/9 of the peak-period capacity and the North Bend factory requires 5/9.Variable costs are driven by the number of purchase orders processed. During the year, 3, 500 purchase orders were processed for the Muncie factory and 4, 500 purchase orders for the North Bend factory. Required: Compute the amount of purchasing department cost that should be charged to each factory for the year.

(Appendix 12B)Delta Company's long-run average and actual machine-hours for last year appear below: Fixed maintenance costs of the company's maintenance service department are budgeted at $60, 000 per year.These fixed costs are incurred in order to support long-run average demand.How much of this cost should be charged to Department B at the end of the year?

(Appendix 12B)Bierly 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 $345, 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 $343, 680 and fixed costs totaled $356, 530.The Atlantic Division had a total of 4, 700 shipments and the Pacific Division had a total of 4, 900 shipments for the year.How much Logistics Department cost should be charged to the Pacific Division at the end of the year?

(Appendix 12B)The Hudson Block Company has a trucking department that delivers crushed stone from the company's quarry to its two cement block production facilities-the West Plant and the East Plant.Budgeted costs for the trucking department are $340, 000 per year in fixed costs and $0.30 per ton variable cost.Last year, 70, 000 tons of crushed stone were budgeted to be delivered to the West Plant and 100, 000 tons of crushed stone to the East Plant.During the year, the trucking department actually delivered 75, 000 tons of crushed stone to the West Plant and 90, 000 tons to the East Plant.Its actual costs for the year were $65, 000 variable and $350, 000 fixed.The level of budgeted fixed costs is determined by peak-period requirements.The West Plant requires 40% of the peak-period capacity and the East Plant requires 60%.The company allocates fixed and variable costs separately. For performance evaluation purposes, how much variable trucking department cost should be charged to the West Plant at the end of the year?

(Appendix 12B)The Bolton Company operates a Health Care service department for its employees.The variable costs of this department are charged to the company's two operating departments, Assembly and Finishing, based on the number of employees in each department.The Health Care Department's total variable cost was budgeted at $55, 000 for the past year;its actual total variable cost was $56, 112.Additional data for the past year follow: How much Health Care variable cost should be charged to Finishing at the end of the year?

(Appendix 12B)Wilson Company maintains a cafeteria for its employees.For June, variable food costs were budgeted at $18 per employee based on a budgeted level of 1, 000 employees in other departments.During the month, an average of 950 employees worked in other departments and actual food costs totaled $16, 150.How much food cost should be charged to other departments at the end of the month?

(Appendix 12B)Kirston Company operates a free cafeteria for the benefit of its employees.Budgeted and actual costs in the cafeteria for last year are given below: The variable costs of the cafeteria are charged to operating departments on the basis of the number of employees in these departments.Data concerning last year are given below: The level of budgeted fixed costs in the cafeteria is determined by the peak-period requirements. Required: a.Compute the dollar amount of the variable and fixed costs that should have been charged to each of the operating departments at the end of last year for purposes of evaluating performance. b.Identify the amount, if any, of actual cafeteria costs that should not be charged to the operating departments.

(Appendix 12B)Manning Products, Inc. , operates an electric power plant that provides all electrical power for the company's Machining and Fabrication Departments.Information on kwh of power usage in these departments for May follows: The costs of the electric power plant are all fixed.The level of budgeted fixed costs is determined by the peak-period requirements.Budgeted fixed costs for May totaled $120, 000.Actual fixed costs for the month totaled $130, 000.The Machining Department requires 70% of the peak-period capacity and the Fabrication Department requires 30%. For performance evaluation purposes, how much of the electric power plant's fixed costs should be charged to the Fabrication Department at the end of the month?

(Appendix 12B)The fixed costs of service departments should be allocated to operating departments in predetermined lump-sum amounts that are determined in advance.

(Appendix 12B)Sheinberg 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 $73 per order.The Order Fulfillment Department's fixed costs are budgeted at $425, 000 for the year.The fixed costs of the Order Fulfillment Department are budgeted based on the peak-period orders. At the end of the year, actual Order Fulfillment Department variable costs totaled $635, 485 and fixed costs totaled $443, 380.The Consumer Division had a total of 2, 340 orders and the Commercial Division had a total of 6, 190 orders for the year. How much Order Fulfillment Department cost should be allocated to the Commercial Division at the end of the year?

(Appendix 12B)Henry Company has an Equipment Services department which performs all needed maintenance work on the equipment in the company's Fabrication and Assembly departments.Costs of the Equipment Services department are charged to the Fabrication and Assembly departments on the basis of direct labor-hours.Data on direct labor-hours for the most recent year follow: The company budgeted its variable maintenance costs at $16, 200 for the year.Actual variable maintenance costs totaled $22, 800. For purposes of measuring performance, how much variable maintenance cost should be charged to the Assembly Department at the end of the year?

(Appendix 12B)Delta Railroad has two operating divisions-Freight and Passenger.The Maintenance Department serves both divisions.Variable Maintenance Department costs are budgeted at $12 per thousand miles.The fixed Maintenance Department costs are budgeted at $800, 000 per year.The level of the fixed Maintenance Department costs are determined by the peak-period requirements.Data for last year follow: During last year, the Maintenance Department actually incurred $650, 000 in variable costs and $815, 000 in fixed costs. For performance evaluation purposes, how much of the fixed Maintenance Department cost should be charged to the Freight Division at the end of the year?

(Appendix 12B)For performance evaluation purposes, the variable costs of a service department should be charged to operating departments using:

(Appendix 12B)Nathan Company has an Equipment Services Department that performs all needed maintenance work on the equipment in the company's Fabrication and Assembly Departments.Costs of the equipment Services Department are charged to the Fabrication and Assembly Departments on the basis of direct labor-hours.Data on direct labor-hours for last year follow: For the year just ended, the company budgeted its variable maintenance costs at $200, 000 for the year.Actual variable maintenance costs for the year totaled $275, 000. How much (if any)of the $275, 000 in variable maintenance cost should not be charged to the Fabrication and Assembly Departments?