Exam 23: Service Department Charges

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(Appendix 12B)FarWest Industrial, Inc.has a Maintenance Department that provides services to the company's two operating departments.The variable costs of the Maintenance Department are charged on the basis of the number of maintenance hours logged in each department.Last year, budgeted variable maintenance costs were $5.00 per maintenance hour and actual variable maintenance costs were $5.75 per maintenance hour. The budgeted and actual maintenance hours for each operating department for last year appear below: (Appendix 12B)FarWest Industrial, Inc.has a Maintenance Department that provides services to the company's two operating departments.The variable costs of the Maintenance Department are charged on the basis of the number of maintenance hours logged in each department.Last year, budgeted variable maintenance costs were $5.00 per maintenance hour and actual variable maintenance costs were $5.75 per maintenance hour. The budgeted and actual maintenance hours for each operating department for last year appear below:   Required: a.Compute the amount of variable Maintenance Department cost that should have been charged to each operating department at the end of the year for performance evaluation purposes. b.Compute the amount of actual variable Maintenance Department cost that should not have been charged to the operating departments at the end of the year for performance evaluation purposes. Required: a.Compute the amount of variable Maintenance Department cost that should have been charged to each operating department at the end of the year for performance evaluation purposes. b.Compute the amount of actual variable Maintenance Department cost that should not have been charged to the operating departments at the end of the year for performance evaluation purposes.

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(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 of the actual trucking department cost should not be charged to the plants at the end of the year?

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(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: (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%. How much (if any)of the electric power plant's actual fixed costs should not be allocated to the other departments? 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%. How much (if any)of the electric power plant's actual fixed costs should not be allocated to the other departments?

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(Appendix 12B)Vancuren Corporation has two operating divisions-an East Division and a West Division.The company's Logistics Department services both divisions.The variable costs of the Logistics Department are budgeted at $31 per shipment.The Logistics Department's fixed costs are budgeted at $274, 400 for the year.The fixed costs of the Logistics Department are determined based on peak-period demand. (Appendix 12B)Vancuren Corporation has two operating divisions-an East Division and a West Division.The company's Logistics Department services both divisions.The variable costs of the Logistics Department are budgeted at $31 per shipment.The Logistics Department's fixed costs are budgeted at $274, 400 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 $215, 820 and fixed costs totaled $294, 690.The East Division had a total of 3, 200 shipments and the West Division had a total of 3, 400 shipments for the year. How much actual Logistics Department cost should not be allocated to the operating divisions at the end of the year? At the end of the year, actual Logistics Department variable costs totaled $215, 820 and fixed costs totaled $294, 690.The East Division had a total of 3, 200 shipments and the West Division had a total of 3, 400 shipments for the year. How much actual Logistics Department cost should not be allocated to the operating divisions at the end of the year?

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(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: (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:   For performance evaluation purposes, how much of the actual Health Care variable cost should not be charged to the operating departments at the end of the year? For performance evaluation purposes, how much of the actual Health Care variable cost should not be charged to the operating departments at the end of the year?

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(Appendix 12B)Sweitzer 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: (Appendix 12B)Sweitzer 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? 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?

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(Appendix 12B)Ideally, the base selected for charging a service department's costs to operating departments should be whatever drives those costs.

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(Appendix 12B)Grimwood 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 by the number of cases produced by the operating departments during the peak-period.Data appear below: (Appendix 12B)Grimwood 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 by the number of cases produced by the operating departments during the peak-period.Data appear below:   How much Maintenance Department cost should be allocated to the Stains Division at the end of the year? How much Maintenance Department cost should be allocated to the Stains Division at the end of the year?

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(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: (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. For performance evaluation purposes, how much of the $275, 000 of actual variable maintenance cost should be charged to the Assembly Department at the end of the year just ended? 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. For performance evaluation purposes, how much of the $275, 000 of actual variable maintenance cost should be charged to the Assembly Department at the end of the year just ended?

(Multiple Choice)
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(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: (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 Assembly for performance evaluation purposes at the end of the year? How much Health Care variable cost should be charged to Assembly for performance evaluation purposes at the end of the year?

(Multiple Choice)
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(Appendix 12B)Vosquez 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: (Appendix 12B)Vosquez 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 Stains Division at the end of the year? For performance evaluation purposes, how much Maintenance Department cost should be charged to the Stains Division at the end of the year?

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