Korvanis Corporation operates a Medical Services Department for its employees. Charges to the company's operating 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 $624,700 per year. Actual Medical Services Department costs for the most recent year were $106,200 for variable costs and $630,000 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 620 520 750 Milling 292 392 500 Assembly 905 805 1,250 Required: 1. Determine the Medical Services Department charges for the year to each of the operating departments-Cutting, Milling, and I 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? Complete this question by entering your answers in the tabs below.
Korvanis Corporation operates a Medical Services Department for its employees. Charges to the company's operating 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 $624,700 per year. Actual Medical Services Department costs for the most recent year were $106,200 for variable costs and $630,000 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 620 520 750 Milling 292 392 500 Assembly 905 805 1,250 Required: 1. Determine the Medical Services Department charges for the year to each of the operating departments-Cutting, Milling, and I 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? Complete this question by entering your answers in the tabs below.
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 28E: Minor Co. has a job order cost system and applies overhead based on departmental rates. Service...
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