27) The Downstate Block Company has a trucking department that delivers crushed stone from
the company’s quarry to its two cement block production facilities—the West Plant and the East
Plant. Budgeted costs for the trucking department are $700,000 per year in fixed costs and $0.50
per ton variable cost. Last year, 75,000 tons of crushed stone were budgeted to be delivered to
the West Plant and 90,000 tons of crushed stone to the East Plant. During the year, the trucking
department actually delivered 74,000 tons of crushed stone to the West Plant and 92,000 tons to
the East Plant. Its actual costs for the year were $81,000 variable and $708,000 fixed. The level
of budgeted fixed costs is determined by peak-period requirements. The West Plant requires 45%
of the peak-period capacity and the East Plant requires 55%. The company allocates fixed and
variable costs separately.
How much variable trucking department cost should be charged to the West Plant at the end of
the year?
A) $37,500
B) $36,108
C) $42,000
D) $37,000
28) The Downstate Block Company has a trucking department that delivers crushed stone from
the company’s quarry to its two cement block production facilities—the West Plant and the East
Plant. Budgeted costs for the trucking department are $700,000 per year in fixed costs and $0.50
per ton variable cost. Last year, 75,000 tons of crushed stone were budgeted to be delivered to
the West Plant and 90,000 tons of crushed stone to the East Plant. During the year, the trucking
department actually delivered 74,000 tons of crushed stone to the West Plant and 92,000 tons to
the East Plant. Its actual costs for the year were $81,000 variable and $708,000 fixed. The level
of budgeted fixed costs is determined by peak-period requirements. The West Plant requires 45%
of the peak-period capacity and the East Plant requires 55%. The company allocates fixed and
variable costs separately.
For performance evaluation purposes, how much of the actual trucking department cost should
not be charged to the plants at the end of the year?
A) $10,000
B) $6,000
C) $0
D) $8,000
29) Azotea 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 $233,700 for the year. The fixed costs of the
Order Fulfillment Department are budgeted based on the peak-period orders.
Percentage of Peak-period
Capacity Required
Budgeted Orders
Consumer Division
40
%
1,200
Commercial Division
60
%
2,900
–
At the end of the year, actual Order Fulfillment Department variable costs totaled $237,390 and
fixed costs totaled $239,140. The Consumer Division had a total of 1,240 orders and the
Commercial Division had a total of 2,860 orders for the year.
How much Order Fulfillment Department cost should be allocated to the Commercial Division at
the end of the year?
A) $300,380
B) $309,078
C) $332,409
D) $323,180
Variable cost charges:
$56 per order × 2,860 orders
Fixed cost charges:
60% × $233,700
Total charges
–
30) Azotea 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 $233,700 for the year. The fixed costs of the
Order Fulfillment Department are budgeted based on the peak-period orders.
Percentage of Peak-period
Capacity Required
Budgeted Orders
Consumer Division
40
%
1,200
Commercial Division
60
%
2,900
–
At the end of the year, actual Order Fulfillment Department variable costs totaled $237,390 and
fixed costs totaled $239,140. The Consumer Division had a total of 1,240 orders and the
Commercial Division had a total of 2,860 orders for the year.
How much actual Order Fulfillment Department cost should not be allocated to the operating
divisions at the end of the year?
A) $7,790
B) $5,440
C) $13,230
D) $0
Total actual costs incurred
Total charges
Spending variance
–
31) Mannerman Products, Inc., operates an electric power plant which provides all electrical
power for the company’s Machining and Fabrication departments. Information on kilowatt-hours
(kwh) of power usage in these departments for May follow:
Machining
Fabrication
Total
Budgeted kwh
20,000
10,000
30,000
Actual kwh
25,000
15,000
40,000
–
The costs of the electric power plant are all fixed. Budgeted fixed costs for May totaled $60,000
and are determined by peak-period requirements. Actual fixed costs for the month totaled
$65,000. The Machining Department requires 60% of the peak-period capacity and the
Fabrication Department requires 40%.
For performance evaluation purposes, how much of the electric power plant’s fixed costs should
be charged to the Fabrication department at the end of the month for purposes of evaluating
performance?
A) $18,000
B) $24,000
C) $30,000
D) $26,000
32) Mannerman Products, Inc., operates an electric power plant which provides all electrical
power for the company’s Machining and Fabrication departments. Information on kilowatt-hours
(kwh) of power usage in these departments for May follow:
Machining
Fabrication
Total
Budgeted kwh
20,000
10,000
30,000
Actual kwh
25,000
15,000
40,000
–
The costs of the electric power plant are all fixed. Budgeted fixed costs for May totaled $60,000
and are determined by peak-period requirements. Actual fixed costs for the month totaled
$65,000. The Machining Department requires 60% of the peak-period capacity and the
Fabrication Department requires 40%.
How much (if any) of the electric power plant’s actual fixed costs of $65,000 should not be
charged to the other departments?
A) $0
B) $10,000
C) $5,000
D) $15,000
33) 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:
Fabrication
Assembly
Budgeted machine-hours for the year
40,000
120,000
Actual machine-hours for the year
45,000
105,000
Percentage of peak-period capacity
23.2
%
76.8
%
–
The following costs pertain to the Maintenance Department:
Budgeted For Year
Actual For Year
Variable costs
$
200,000
$
240,000
Fixed costs
$
500,000
$
450,000
–
For performance evaluation purposes, how much of the Maintenance Department’s variable cost
should be charged to the Fabrication Department at year-end?
A) $36,000
B) $46,400
C) $50,000
D) $56,250
34) 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:
Fabrication
Assembly
Budgeted machine-hours for the year
40,000
120,000
Actual machine-hours for the year
45,000
105,000
Percentage of peak-period capacity
23.2
%
76.8
%
–
The following costs pertain to the Maintenance Department:
Budgeted For Year
Actual For Year
Variable costs
$
200,000
$
240,000
Fixed costs
$
500,000
$
450,000
–
For performance evaluation purposes, how much of the Maintenance Department’s fixed cost
should be charged to the Assembly Department at year-end?
A) $315,000
B) $337,500
C) $345,600
D) $384,000
35) Lakeside Nursing Home has two operating departments, Custodial Care and Rehabilitation.
It also has a Housekeeping Department that serves the two operating departments. The costs of
the Housekeeping Department are all variable and are charged to the operating departments on
the basis of labor-hours. Data for September follow:
Custodial Care
Rehabilitation
Budgeted labor-hours
3,000
1,000
Actual labor-hours
3,200
1,600
–
The budgeted costs of the Housekeeping Department for September were $24,000 and the actual
costs were $29,760.
How much Housekeeping Department cost should be charged to Rehabilitation at the end of
September?
A) $19,840
B) $9,920
C) $9,600
D) $7,440
36) Lakeside Nursing Home has two operating departments, Custodial Care and Rehabilitation.
It also has a Housekeeping Department that serves the two operating departments. The costs of
the Housekeeping Department are all variable and are charged to the operating departments on
the basis of labor-hours. Data for September follow:
Custodial Care
Rehabilitation
Budgeted labor-hours
3,000
1,000
Actual labor-hours
3,200
1,600
–
The budgeted costs of the Housekeeping Department for September were $24,000 and the actual
costs were $29,760.
For performance evaluation purposes, how much of the actual Housekeeping Department costs
for September should not be charged to the operating departments?
A) $960
B) $5,760
C) $0
D) $1,240
37) Nafth Company has an Equipment Services Department that performs all needed
maintenance work on the equipment in the company’s Fabrication and Assembly Departments.
Costs of the equipment Services Department are charged to the Fabrication and Assembly
Departments on the basis of direct labor-hours. Data on direct labor-hours for last year follow:
Fabrication
Assembly
Total
Budgeted direct labor-hours
20,000
50,000
70,000
Actual direct labor-hours
25,000
55,000
80,000
Peak-period direct labor-hours
30,000
70,000
100,000
–
For the year just ended, the company budgeted its variable maintenance costs at $210,000 for the
year. Actual variable maintenance costs for the year totaled $255,000.
For performance evaluation purposes, how much of the $255,000 of actual variable maintenance
cost should be charged to the Assembly Department at the end of the year just ended?
A) $182,143
B) $175,312
C) $165,000
D) $178,500
38) Nafth Company has an Equipment Services Department that performs all needed
maintenance work on the equipment in the company’s Fabrication and Assembly Departments.
Costs of the equipment Services Department are charged to the Fabrication and Assembly
Departments on the basis of direct labor-hours. Data on direct labor-hours for last year follow:
Fabrication
Assembly
Total
Budgeted direct labor-hours
20,000
50,000
70,000
Actual direct labor-hours
25,000
55,000
80,000
Peak-period direct labor-hours
30,000
70,000
100,000
–
For the year just ended, the company budgeted its variable maintenance costs at $210,000 for the
year. Actual variable maintenance costs for the year totaled $255,000.
How much (if any) of the $255,000 in variable maintenance cost should not be charged to the
Fabrication and Assembly Departments?
A) $0
B) $15,000
C) $45,000
D) $60,000