Deck 21: Service Department Charges

Question 1

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

Answer 1

B
Explanation: 1,200  $20 = $24,000

Question 2

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

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

Answer 2

C

Question 3

Auchmoody 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 $63 per order.The Customer Service Department's fixed costs are budgeted at $372,600 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 $444,405 and fixed costs totaled $382,900.The Consumer Division had a total of 2,030 orders and the Commercial Division had a total of 4,860 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)$10,300
B)$0
C)$10,335
D)$20,635

Answer 3

D
Explanation: The amount of cost that would be charged to each of the operating divisions at the end of the year would be as follows:
The spending variance represents the difference between the Customer Service Department's actual costs and what those costs should have been,given the actual level of activity.This difference is properly the responsibility of the Customer Service Department and should not be charged to the operating divisions.

Question 4

An allocation basis for service department costs should reflect how much cost the operating departments can bear.For this reason,the sales of the operating departments is often a good allocation basis.

Question 5

Community General Hospital has a Food Services Department that provides meals for all patients in the hospital.Budgeted and actual meals served for the month just ended are: The budgeted variable cost of meals for the month just ended was $100,000;the actual variable cost of meals for the month was $130,000.
How much of the $130,000 actual Food Services variable cost should be charged to the Surgical Department at the end of the month just completed?

A)$62,500
B)$65,000
C)$95,000
D)$98,800

Question 6

Derico 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 $42 per shipment.The Logistics Department's fixed costs are budgeted at $365,800 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 $388,800 and fixed costs totaled $378,080.The Atlantic Division had a total of 4,700 shipments and the Pacific Division had a total of 4,300 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)$23,080
B)$0
C)$12,280
D)$10,800

Question 7

Wentz 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 $56 per order.The Order Fulfillment Department's fixed costs are budgeted at $190,800 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 $206,640 and fixed costs totaled $202,680.The Consumer Division had a total of 1,240 orders and the Commercial Division had a total of 2,360 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)$257,240
B)$246,640
C)$268,332
D)$257,072

Question 8

Fox Company has the following data concerning the machine-hours in its operating departments: Fixed costs of the maintenance department are budgeted at $30,000 per year.The fixed maintenance costs are incurred in order to service long-run average demand.The actual fixed maintenance cost was actually $32,000.How much fixed maintenance cost should be charged to Department B at the end of the year for performance evaluation purposes?

A)$12,000
B)$14,400
C)$15,000
D)$18,000

Question 9

Variable service department costs should be charged to operating departments at the end of the period according to the formula:

A)Budgeted rate x Budgeted activity.
B)Budgeted rate x Actual activity.
C)Actual rate x Actual activity.
D)Budgeted total cost x Percentage of peak-period capacity required.

Question 10

The medical services department of Carey Company budgeted $20 of variable medical expenses per employee for May,based on 1,000 employees in operating departments.During May an average of 1,050 employees were employed in operating departments.Actual variable medical expenses totaled $23,100 for the month.How much variable medical expenses should be charged to operating departments at the end of May for performance evaluation purposes?

A)$21,000
B)$23,100
C)$20,000
D)$22,000

Question 11

For performance evaluation purposes,actual service department costs instead of budgeted service department costs should be allocated to operating departments.

Question 12

Lakeside Nursing Home has two operating departments,Custodial Care and Rehabilitation.It also has a Housekeeping Department that serves the two operating departments.The costs of the Housekeeping Department are all variable and are charged to the operating departments on the basis of labor-hours.Data for September follow: The budgeted costs of the Housekeeping Department for September were $24,000 and the actual costs were $29,760.
How much of the actual Housekeeping Department costs for September should not be charged to the operating departments for performance evaluation purposes?

A)$960
B)$5,760
C)$0
D)$1,240

Question 13

Rapone 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)$261,600
B)$396,000
C)$277,200
D)$220,000

Question 14

Schaich 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)$219,710
B)$209,412
C)$232,051
D)$197,520

Question 15

Which of the following would be the least appropriate allocation base to allocate the cost of a human resources department to other departments?

A)sales dollars
B)labor turnover
C)hours of training
D)number of employees

Question 16

The long-run average or peak period needs of operating departments would be the most suitable base for allocating:

A)the variable element of power costs.
B)the fixed element of power costs.
C)total power costs.
D)any spending variance associated with power costs.

Question 17

The fixed costs of service departments should be allocated to operating departments in proportion to the amount of capacity the service departments actually use during the period.

Question 18

Lakeside Nursing Home has two operating departments,Custodial Care and Rehabilitation.It also has a Housekeeping Department that serves the two operating departments.The costs of the Housekeeping Department are all variable and are charged to the operating departments on the basis of labor-hours.Data for September follow: The budgeted costs of the Housekeeping Department for September were $24,000 and the actual costs were $29,760.
How much Housekeeping Department cost should be charged to Rehabilitation at the end of September for performance evaluation purposes?

A)$19,840
B)$9,920
C)$9,600
D)$7,440

Question 19

Krikorian 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 $37 per shipment.The Logistics Department's fixed costs are budgeted at $330,600 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 Altlantic Division at the end of the year for performance evaluation purposes?

A)$198,840
B)$272,600
C)$169,200
D)$218,080

Question 20

Bunyard 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 $45 per shipment.The Logistics Department's fixed costs are budgeted at $212,400 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 $202,400 and fixed costs totaled $223,900.The Atlantic Division had a total of 2,100 shipments and the Pacific Division had a total of 2,300 shipments for the year.How much Logistics Department cost should be charged to the Pacific Division at the end of the year for performance evaluation purposes?

A)$241,560
B)$222,839
C)$251,335
D)$214,527

Question 21

Fickling 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 $51 per order.The Order Fulfillment Department's fixed costs are budgeted at $484,000 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 $460,404 and fixed costs totaled $493,700.The Consumer Division had a total of 2,430 orders and the Commercial Division had a total of 6,390 orders for the year.
How much Order Fulfillment Department cost should be allocated to the Commercial Division at the end of the year?

A)$676,543
B)$679,148
C)$691,239
D)$664,690

Question 22

Ocon 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 $28 per order.The Customer Service Department's fixed costs are budgeted at $372,300 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 $212,284 and fixed costs totaled $381,740.The Inland Division had a total of 1,710 orders and the Coast Division had a total of 5,560 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 23

Komlos 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 $48 per shipment.The Logistics Department's fixed costs are budgeted at $253,000 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 $360,620 and fixed costs totaled $267,210.The East Division had a total of 4,200 shipments and the West Division had a total of 3,100 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)$10,220
B)$24,430
C)$0
D)$14,210

Question 24

Fixed costs budgeted for Caterton's Maintenance Department for last year totaled $280,000;actual fixed costs for the year totaled $308,000.The level of budgeted fixed costs is determined by peak-period requirements.The Milling Department requires 15/35 of the peak-period capacity and the Assembly Department requires 20/35.
How much fixed maintenance cost should be charged to the Assembly department at the end of the year for purposes of measuring performance?

A)$160,000
B)$176,000
C)$173,500
D)$147,800

Question 25

Caruana 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)$582,027
B)$549,663
C)$575,460
D)$543,390

Question 26

Community General Hospital has a Food Services Department that provides meals for all patients in the hospital.Budgeted and actual meals served for the month just ended are: The budgeted variable cost of meals for the month just ended was $100,000;the actual variable cost of meals for the month was $130,000.
How much of the $130,000 actual Food Services cost for the month just completed should be kept in the Food Services Department and not charged to the other departments?

A)$30,000
B)$5,000
C)$4,000
D)$0

Question 27

Boulay 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 $34 per shipment.The Logistics Department's fixed costs are budgeted at $175,000 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 $147,840 and fixed costs totaled $189,610.The North Division had a total of 2,100 shipments and the South Division had a total of 2,100 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 28

Fickling 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 $51 per order.The Order Fulfillment Department's fixed costs are budgeted at $484,000 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 $460,404 and fixed costs totaled $493,700.The Consumer Division had a total of 2,430 orders and the Commercial Division had a total of 6,390 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)$20,284
B)$0
C)$10,584
D)$9,700

Question 29

Caruana 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)$5,401
B)$0
C)$4,460
D)$9,861

Question 30

Smurnov Company has a purchasing department that provides services to two factories located in Austin and the other in Belmont.Budgeted costs for the purchasing department consist of $91,000 per year of fixed costs and $7 per purchase order for variable costs.The level of budgeted fixed costs is determined by the peak-period requirements.The Austin factory requires 3/7 of the peak-period capacity and the Belmont factory requires 4/7.
During the year,2,700 purchase orders were processed for the Austin factory and 3,900 purchase orders for the Belmont factory.
Required:
Compute the amount of purchasing department cost that should be charged to each factory for the year.

Question 31

Fixed costs budgeted for Caterton's Maintenance Department for last year totaled $280,000;actual fixed costs for the year totaled $308,000.The level of budgeted fixed costs is determined by peak-period requirements.The Milling Department requires 15/35 of the peak-period capacity and the Assembly Department requires 20/35.
How much of the actual fixed maintenance cost for the year should be kept in the Maintenance department and not charged to the other departments for performance evaluation purposes?

A)$0
B)$308,000
C)$28,000
D)$280,000

Question 32

Szafran 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 33

Komlos 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 $48 per shipment.The Logistics Department's fixed costs are budgeted at $253,000 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 $360,620 and fixed costs totaled $267,210.The East Division had a total of 4,200 shipments and the West Division had a total of 3,100 shipments for the year.
How much Logistics Department cost should be allocated to the West Division at the end of the year?

A)$340,187
B)$256,238
C)$325,900
D)$266,613

Question 34

Gabritz,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 $7.50 per maintenance hour and actual variable maintenance costs were $7.80 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.