e 11-15 (Algo) Service Department Charges [LO11-4] Korvanis Corporation operates a Medical Services Department for its employees. Charges to th
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Exercise 11-15 (Algo) Service Department Charges [LO11-4]
Korvanis Corporation operates a Medical Services Department for its employees. Charges to the company’s operating departments for the variable costs of the Medical Services Department are based on the actual number of employees in each department. Charges for the fixed costs of the Medical Services Department are based on the long-run average number of employees in each operating department.
Variable Medical Services Department costs are budgeted at $59 per employee. Fixed Medical Services Department costs are budgeted at $653,000 per year. Actual Medical Services Department costs for the most recent year were $107,000 for variable costs and $659,000 for fixed costs. Data concerning employees in the three operating departments follow:
| Cutting | Milling | Assembly | |
|---|---|---|---|
| Budgeted number of employees | 618 | 289 | 920 |
| Actual number of employees for the most recent year | 518 | 389 | 820 |
| Long-run average number of employees | 900 | 600 | 1,500 |
Required:
1. Determine the Medical Services Department charges for the year to each of the operating departments—Cutting, Milling, and Assembly.
2. How much, if any, of the actual Medical Services Department costs for the year should be treated as a spending variance and not charged to the operating departments?
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- Exercise 11-15 (Algo) Service Department Charges [LO11-4] Korvanis Corporation operates a Medical Services Department for its employees. Charges to the company's operating departments for the variable costs of the Medical Services Department are based on the actual number of employees in each department. Charges for the fixed costs of the Medical Services Department are based on the long-run average number of employees in each operating department. ces Variable Medical Services Department costs are budgeted at $59 per employee. Fixed Medical Services Department costs are budgeted at $643,700 per year. Actual Medical Services Department costs for the most recent year were $106,000 for variable costs and $649,000 for fixed costs. Data concerning employees in the three operating departments follow: Budgeted number of employees Actual number of employees for the most recent year Long-run average number of employees. Cutting 600 500 750 Medical services department charges Cutting Milling…Service Department Charges Korvanis Corporation operates a Medical Services Department for its employees. Charges to the company’s operating departments for the variable costs of the Medical Services Department are based on the actual number of employees in each department. Charges for the fixed costs of the Medical Services Department are based on the long-run average number of employees in each operating department. Variable Medical Services Department costs are budgeted at $80 per employee. Fixed Medical Services Department costs are budgeted at $400,000 per year. Actual Medical Services Department costs for the most recent year were $41,000 for variable costs and $408,000 for fixed costs. Data concerning employees in the three operating departments follow: Required: 1. Determine the Medical Services Department charges for the year to each of the operating departments—Cutting, Milling, and Assembly. 2. How much, if any, of the actual Medical Services Department costs for the year…Required information The Foundational 15 (Algo) (LO9-1, LO9-2, LO9-3] [The following information applies to the questions displayed below] Adger Corporation is a service company that measures its output based on the number of customers served. The company provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results for May as shown below: Revenue Employee salaries and wages Travel expenses Other expenses Fixed Element per Month $ 53,000 $32,000 Variable Element per Customer Served $5,400 $ 1,400 $750 Actual Total for May $ 203,000 $108,500 $ 27,700 $ 30,000 When preparing its planning budget the company estimated that it would serve 35 customers per month; however, during May the company actually served 40 customers. Foundational 9-9 (Algo) 9. What is Adger's other expenses spending variance for May? (Indicate the effect of each variance by selecting "F" for favorable. "U" for unfavorable, and "None" for no effect (i.e., zero…
- Korvanis Corporation operates a Medical Services Department for its employees. Charges to the company's operating departments for the variable costs of the Medical Services Department are based on the actual number of employees in each department. Charges for the fixed costs of the Medical Services Department are based on the long-run average number of employees in each operating department. Variable Medical Services Department costs are budgeted at $55 per employee. Fixed Medical Services Department costs are budgeted at $659,700 per year. Actual Medical Services Department costs for the most recent year were $105,100 for variable costs and $665,000 for fixed costs. Data concerning employees in the three operating departments follow: Rudgeted number of employees Actual number of employees for the most recent year Long-run average number of employees Cutting 610 510 990 Milling 287 387 660 Assembly 909 809 1,650 Required: 1. Determine the Medical Services Department charges for the…Korvanis Corporation operates a Medical Services Department for its employees. Charges to the company’s operating departments for the variable costs of the Medical Services Department are based on the actual number of employees in each department. Charges for the fixed costs of the Medical Services Department are based on the long-run average number of employees in each operating department. Variable Medical Services Department costs are budgeted at $58 per employee. Fixed Medical Services Department costs are budgeted at $683,200 per year. Actual Medical Services Department costs for the most recent year were $105,800 for variable costs and $689,000 for fixed costs. Data concerning employees in the three operating departments follow: Cutting Milling Assembly Budgeted number of employees 604 287 918 Actual number of employees for the most recent year 504 387 818 Long-run average number of employees 720 480 1,200 Required: 1. Determine the Medical Services…Korvanis Corporation operates a Medical Services Department for its employees. Charges to the company's operating departments for the variable costs of the Medical Services Department are based on the actual number of employees in each department. Charges for the fixed costs of the Medical Services Department are based on the long-run average number of employees in each operating department. Variable Medical Services Department costs are budgeted at $57 per employee. Fixed Medical Services Department costs are budgeted at $639,300 per year. Actual Medical Services Department costs for the most recent year were $105,800 for variable costs and $645,000 for fixed costs. Data concerning employees in the three operating departments follow: Budgeted number of employees Cutting 604 Milling 293 Assembly 918 Actual number of employees for the most recent year 504 393 Long-run average number of employees 1,050 700 818 1,750 Required: 1. Determine the Medical Services Department charges for the…
- Korvanis Corporation operates a Medical Services Department that charges its variable costs to operating departments based on the actual number of employees in each department. It charges fixed costs to operating departments based on the long-run average number of employees. The Medical Services Department's variable costs are budgeted at $55 per employee and its fixed costs are budgeted at $609,700 per year. Actual Medical Services Department costs for the most recent year were $105,600 for variable costs and $615,000 for fixed costs. Data concerning employees in the three operating departments follow: Cutting Milling Budgeted number of employees 612 285 Assembly 915 Actual number of employees for the most recent year 512 385 815 Long-run average number of employees 630 420 1,050 Required: 1. Calculate the Medical Services Department charges to each of the operating departments-Cutting, Milling, and Assembly. 2. How much, if any, of the Medical Services Department's actual costs…Problem 11-22 (Algo) Service Department Charges [LO11-4] Sharp Motor Company has a cafeteria that serves two operating divisions-an Auto Division and a Truck Division. The costs of operating the cafeteria are budgeted at $72,000 per month plus $0.60 per meal served. The fixed costs of the cafeteria are determined by peak-period requirements. The Auto Division is responsible for 63% of the peak- period requirements, and the Truck Division is responsible for the other 37%. For June, the Auto Division estimated it would need 84,000 meals, and the Truck Division estimated it would need 54,000 meals. However, due to unexpected layoffs of employees during the month, only 54,000 meals were served to the Auto Division. Another 54,000 meals were served to the Truck Division as planned. The cafeteria's actual fixed costs for June totaled $75,000 and its actual meal costs totaled $82,800. Required: 1. How much cafeteria cost should be charged to each division for June? 2. Assume the company…8. Tabarez 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: Maintenance Department: Budgeted variable cost Budgeted total fixed cost $ 2 per case $ 1,140,000 $ 239,400 $ 1,157,980 Actual total variable cost Actual total fixed cost Paints Division: 30% Percentage of peak period capacity required Budgeted cases Actual cases 29,000 29,040 Stains Division: 70% Percentage of peak period capacity required Budgeted cases Actual cases 85,000 84,960 For performance evaluation purposes, how much Maintenance Department cost should be charged to the Stains Division at the end of the year? A. $989,002 B. $1,041,416…
- Problem 11-22 (Algo) Service Department Charges [LO11-4] Sharp Motor Company has a cafeteria that serves two operating divisions-an Auto Division and a Truck Division. The costs of operating the cafeteria are budgeted at $87,000 per month plus $0.80 per meal served. The fixed costs of the cafeteria are determined by peak-period requirements. The Auto Division is responsible for 63% of the peak- period requirements, and the Truck Division is responsible for the other 37%. For June, the Auto Division estimated it would need 81,000 meals, and the Truck Division estimated it would need 51,000 meals. However, due to unexpected layoffs of employees during the month, only 51,000 meals were served to the Auto Division. Another 51,000 meals were served to the Truck Division as planned. The cafeteria's actual fixed costs for June totaled $96,000 and its actual meal costs totaled $99,600. Required: 1. How much cafeteria cost should be charged to each division for June? 2. Assume the company…Problem 11-60 (Algo) Cost Allocation: Step and Reciprocal Methods (LO 11-1) Dunedin Bank has two operating departments (Retail and Commercial) and three service departments: Operations, Information Technology (IT), and Transactions. For the last period, the following costs and service department usage ratios were recorded: Supplying Department Transactions IT Operations Direct cost IT From: Operations Transactions Transactions Total 8 10% 70% $ 310,000 IT Using Department Operations Costs Operations S 250,000 $ 750,000 670,000 X 1,510,000 x 8 8 8 $ 730,000 Required: a. Allocate the service department costs to the two operating departments using the reciprocal method. Answer is complete but not entirely correct. Allocated to: Transactions $ 250,000 $ 2,233,333 x 8 30% 8 $ 1,570,000 $ Retail Retail 0X $ 0.x 0x 0 Commercial S $ 3,770,000 78% 30% 10% 833,333 X 0x 0x 833,333 Commercial 36% 38% 28% $ 2, 320, 000Problem 11-60 (Algo) Cost Allocation: Step and Reciprocal Methods (LO 11-1) Dunedin Bank has two operating departments (Retail and Commercial) and three service departments: Operations, Information Technology (IT), and Transactions. For the last period, the following costs and service department usage ratios were recorded: Supplying Department Transactions IT Operations Direct cost IT From: Operations Transactions Transactions Total 8 18% 70% $ 310,000 IT Costs Operations S 250,000 $ 750,000 670,000 x 1,510,000 x Using Department Operations 8 8 8 $ $ 730,000 Required: a. Allocate the service department costs to the two operating departments using the reciprocal method. x Answer is complete but not entirely correct. Allocated to: Transactions 250,000 XS 2,233,333 x $ 8 30% 8 $ 1,570,000 $ 3,770,000 Retail 0X X $ Retail OX 0x 0 Commercial S 70% 30% 18% 833,333 X 0x 0 x 833,333 Commercial 30% 38% 28 $ 2,320,000