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Exam 21: Service Department Charges

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Question 21

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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

E) A) and C)
F) None of the above

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Question 22

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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

E) None of the above
F) A) and B)

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Question 23

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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?

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?

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

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?

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

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?

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

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.

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?

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.

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?

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?