Leslie Company operates a cafetena for the benefit of its employees. The company subsidizes the cafeteria heavily by allowing employees to purchase meals at greatly reduced prices. Budgeted and actual costs the cafeteria for the year just ended are as follows: Actual $ 898,750 $ 340,000 $ 419,000 "Unrecovered cost after deducting amounts received from employees. Costs of the cafeteria are charged to producing departments on the basis of the number of employees in these departments. Fixed costs are charged on the basis of the percentage of peak-period requirements. Data concerning the company's producing departments follows: Budgeted $1,114,280 Variable costs Fixed costs Budgeted number of employees Actual number of employees Percentage of peak-period requirements Machining 572 392 40% Assembly 993 858 60% Total 1,565 1,250 100% Required: a. Compute the dollar amount of variable and fixed costs that should be charged to each of the producing 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.

Leslie Company operates a cafetena for the benefit of its employees. The company subsidizes the cafeteria heavily by allowing employees to purchase meals at greatly reduced prices. Budgeted and actual costs the cafeteria for the year just ended are as follows: Actual $ 898,750 $ 340,000 $ 419,000 "Unrecovered cost after deducting amounts received from employees. Costs of the cafeteria are charged to producing departments on the basis of the number of employees in these departments. Fixed costs are charged on the basis of the percentage of peak-period requirements. Data concerning the company's producing departments follows: Budgeted $1,114,280 Variable costs Fixed costs Budgeted number of employees Actual number of employees Percentage of peak-period requirements Machining 572 392 40% Assembly 993 858 60% Total 1,565 1,250 100% Required: a. Compute the dollar amount of variable and fixed costs that should be charged to each of the producing 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.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 30E: A company uses charging rates to allocate service department costs to the using departments. The...

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Leslie Company operates a cafeteria for the benefit of its employees. The company subsidizes the cafeteria heavily by allowing employees to purchase meals at greatly reduced prices. Budgeted and actual costs in the cafeteria for the year just ended are as follows: Variable costs* Fixed costs Budgeted Actual $933,165 $777,240 $366,000 $391,000 "Unrecovered cost after deducting amounts received from employees. Costs of the cafeteria are charged to producing departments on the basis of the number of employees in these departments. Fixed costs are charged on the basis of the percentage of peak-period requirements. Data concerning the company's producing departments follows: Budgeted number of employees Actual number of employees Percentage of peak-period requirements Machining 465 270 Amounts to be charged Machining Variable cost Fixed cost 40% Complete this question by entering your answers in the tabs below. Required A Required: a. Compute the dollar amount of variable and fixed costs…
A company uses charging rates to allocate service department costs to the using departments. The accountant compiled the following information on one of the service departments: If Department K plans to use 1,350 hours of the service departments service in the coming year, how much of the service departments cost is allocated to Department K? a. 3,375 b. 27,300 c. 26,325 d. 23,950
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