Deck 8: Service Department Charges

Question 1

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?

A)$273,000
B)$218,400
C)$169,000
D)$207,000

Answer 1

D

Question 2

For performance evaluation purposes, any variance over budgeted fixed costs in a service department should be charged to the departments that use the service.

Answer 2

False

Question 3

For performance evaluation purposes, any variance between budgeted fixed costs and actual fixed costs in a service department:

A)should be allocated both to operating departments and to other service departments on the basis of usage.
B)should be allocated to operating departments only on the basis of usage.
C)should be allocated to other service departments only on the basis of usage.
D)should be retained in the service department itself.

Answer 3

D

Question 4

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.

Question 5

Sales dollars is generally a poor base to use in allocating service department costs.

Question 6

Charlie Company has provided the following data concerning power consumption in the company's two operating departments: The company has a Power Services department which provides electrical power for the operating departments. Fixed costs in Power Services are budgeted at $300,000 for the year and are incurred in order to support peak-period power requirements. How much of this cost should be charged to Department 1?

A)$120,000
B)$150,000
C)$180,000
D)$0

Question 7

Service department costs should not be separated into fixed and variable costs when charging operating departments for their services.

Question 8

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?

A)$408,100
B)$342,694
C)$357,399
D)$424,991

Question 9

The medical services department of Bantam Company budgeted $20 of variable medical expenses per employee for the year, based on 1,500 employees in the operating departments. During the year, an average of 1,200 employees were employed in operating departments. Actual variable medical expenses totaled $28,800 for the year. How much variable medical expenses should be charged to operating departments at year-end?

A)$28,800
B)$24,000
C)$23,040
D)$28,000

Question 10

If a portion of the actual cost incurred by a service department is not charged to operating departments, then at the end of the period, this uncharged cost should be:

A)allocated equally between the other departments.
B)allocated between the other departments in proportions to budgeted activity.
C)treated as a variance of the service department.
D)treated as a variance of the other departments.

Question 11

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?

A)$16,150
B)$17,000
C)$17,100
D)$18,000

Question 12

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?

A)$30,000
B)$22,500
C)$24,000
D)$18,000

Question 13

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

Question 14

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

A)the actual variable rate and the budgeted level of activity for the period.
B)the budgeted variable rate and the actual level of activity for the period.
C)the budgeted variable rate and the budgeted level of activity for the period.
D)the actual variable rate and the peak-period or long-run average servicing capacity.

Question 15

Plaut 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 $55 per order. The Order Fulfillment Department's fixed costs are budgeted at $403,200 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 $409,528 and fixed costs totaled $422,330. The Consumer Division had a total of 1,730 orders and the Commercial Division had a total of 5,480 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?

A)$607,854
B)$632,258
C)$583,640
D)$606,895

Question 16

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

Question 17

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?

A)$30,330
B)$0
C)$19,530
D)$10,800

Question 18

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?

A)$18,490
B)$5,390
C)$23,880
D)$0

Question 19

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?

A)$502,770
B)$543,108
C)$527,890
D)$517,306

Question 20

For performance evaluation purposes, the lump-sum amount of fixed service department costs charged to an operating department should usually be based on either the operating department's peak-period or long-run average needs.

Question 21

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 fixed trucking department cost should be charged to the West Plant at the end of the year?

A)$160,000
B)$204,000
C)$140,000
D)$136,000

Question 22

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?

A)$0
B)$10,000
C)$5,000
D)$20,000

Question 23

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?

A)$36,000
B)$91,000
C)$44,000
D)$97,500

Question 24

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 actual Order Fulfillment Department cost should not be allocated to the operating divisions at the end of the year?

A)$31,175
B)$18,380
C)$12,795
D)$0

Question 25

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

A)$4,640
B)$0
C)$34,628
D)$29,988

Question 26

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?

A)$22,500
B)$24,000
C)$21,000
D)$32,000

Question 27

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 performance evaluation purposes, how much (if any) of the actual variable maintenance cost should not be allocated to the Fabrication and Assembly Departments at the end of the year?

A)$1,200
B)$0
C)$6,600
D)$22,800

Question 28

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?

A)$480,000
B)$440,000
C)$472,000
D)$50,000

Question 29

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 Logistics Department cost should be allocated to the West Division at the end of the year?

A)$246,758
B)$262,990
C)$317,463
D)$297,480

Question 30

Budgeted fixed costs in Swasey company's Maintenance Department were $180,000; actual fixed costs in the department for the year were $186,000. The level of budgeted fixed costs in the Maintenance Department depends on peak-period requirements. The Milling Department requires one-third of the peak-period capacity and the Assembly Department requires two-thirds of peak-period capacity.

-How much fixed Maintenance Department cost should be charged to the Milling Department at year-end?

A)$93,000
B)$60,000
C)$62,000
D)$46,500

Question 31

Budgeted fixed costs in Swasey company's Maintenance Department were $180,000; actual fixed costs in the department for the year were $186,000. The level of budgeted fixed costs in the Maintenance Department depends on peak-period requirements. The Milling Department requires one-third of the peak-period capacity and the Assembly Department requires two-thirds of peak-period capacity.

-How much fixed Maintenance Department cost should be charged to the Assembly Department at the end of the year?

A)$90,000
B)$124,000
C)$135,000
D)$120,000

Question 32

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?

A)$12,600
B)$12,160
C)$11,400
D)$6,600

Question 33

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 Maintenance Department's actual variable costs should be retained in that department as a spending variance?

A)$74,000
B)$0
C)$50,000
D)$60,000

Question 34

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?

A)$175,000
B)$116,900
C)$192,500
D)$150,000

Question 35

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?

A)$0
B)$75,000
C)$25,000
D)$108,000

Question 36

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?

A)$900,532
B)$924,994
C)$858,220
D)$882,420

Question 37

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?

A)$760,281
B)$749,352
C)$728,120
D)$782,904

Question 38

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 Maintenance Department's actual fixed costs should be retained in that department as a spending variance?

A)$0
B)$15,000
C)$12,000
D)$18,000

Question 39

Hosang 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 $32 per shipment. The Logistics Department's fixed costs are budgeted at $243,000 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?

A)$123,450
B)$103,200
C)$135,450
D)$193,500

Question 40

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?

A)$10,000
B)$25,500
C)$0
D)$15,700

Question 41

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?

Question 42

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.

Question 43

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?

A)$31,510
B)$11,220
C)$20,290
D)$0

Question 44

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?

A)$33,000
B)$33,600
C)$33,440
D)$34,048

Question 45

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.

Question 46

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.

Question 47

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?

A)$21,670
B)$22,000
C)$22,064
D)$22,400

Question 48

Brosnan 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 $39 per shipment. The Logistics Department's fixed costs are budgeted at $242,000 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 $245,830 and fixed costs totaled $247,360. The North Division had a total of 3,300 shipments and the South Division had a total of 2,800 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?

Question 49

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?

A)$55,000
B)$56,112
C)$1,002
D)$1,112

Question 50

Larubbio Corporation has two operating divisions--an Inland Division and a Coast Division. The company's Customer Service Department provides services to both divisions. The variable costs of the Customer Service Department are budgeted at $23 per order. The Customer Service Department's fixed costs are budgeted at $407,100 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 $168,560 and fixed costs totaled $426,700. The Inland Division had a total of 2,110 orders and the Coast Division had a total of 4,770 orders for the year.
Required:
a. Prepare a report showing how much of the Customer Service Department's costs should be charged to each of the operating divisions at the end of the year.
b. How much of the actual Customer Service 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?

Question 51

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.