Question 1

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?

Accepted Answer

A)   $12,000
B)   $14,400
C)   $15,000
D)   $18,000E) All of the above
F) None of the above

Question 2

Since sales dollars represents "ability to pay," it is superior to most other bases used for allocating or charging service department costs.

Accepted Answer

A) True 
 B)False

Question 3

Nealon 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?

Accepted Answer

a. The operating divisions would be char...

Question 4

Ghia Manufacturing Corporation charges its Maintenance Department's service costs to two operating departments, Fabrication and Assembly. Charges are made on the basis of machine-hours. Information pertaining to machine-hours for the year follows:  The following costs pertain to the Maintenance Department:
 For performance evaluation purposes, how much of the Maintenance Department's fixed cost should be charged to the Assembly Department at year-end?

Accepted Answer

A)   $315,000
B)   $337,500
C)   $345,600
D)   $384,000E) A) and B)
F) None of the above

Exam 22: Service Department Charges

Since sales dollars represents "ability to pay," it is superior to most other bases used for allocating or charging service department costs.

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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a. The operating divisions would be char...
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Exam 22: Service Department Charges

Since sales dollars represents "ability to pay," it is superior to most other bases used for allocating or charging service department costs.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answerverifieda. The operating divisions would be char...View AnswerShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
a. The operating divisions would be char...
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