Accounting Chapter 12B How Much Variable Freight Department Costs

24. How much variable Freight Department costs should be charged to the Salina Plant at

the end of the year for performance evaluation purposes?

12B-22

25. How much of the actual Freight Department cost should not be charged to either plant at

the end of the year for performance evaluation purposes?

Lindon Hospital has a Food Services Department that provides meals for all patients in the

hospital. Budgeted and actual meals served for June follow:

The budgeted variable cost of meals for June was $75,000; the actual variable cost of meals for

the month was $97,500.

26. How much Food Services cost should be charged to the Surgical Department at the end

of June for performance evaluation purposes?

12B-24

27. How much of the actual Food Services cost for June should be kept in the Food Services

Department and not be charged to the other departments for performance evaluation purposes?

Gunnison Foods has two operating departments, Processing and Packaging. It also has a

Housekeeping Department that serves the two operating departments. The costs of the

Housekeeping Department are all variable and are allocated to the operating departments on the

basis of the number of employees. Data for last year follow:

The budgeted costs of the Housekeeping Department were $40,800 and the actual costs were

$44,980.

28. How much Housekeeping Department cost should have been charged to Packaging at the

end of last year for performance evaluation purposes?

29. How much of the actual Housekeeping Department costs should not have been charged

to the operating departments for performance evaluation purposes?

12B-27

Boudrie 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:

30. How much Maintenance Department cost should be allocated to the Stains Division at

the end of the year?

31. How much actual Maintenance Department cost should not be allocated to the operating

divisions at the end of the year?

Fixed costs budgeted for Caldwell Company’s Maintenance Department for the year

totaled $480,000; actual fixed costs for the year totaled $510,000. The level of budgeted fixed

costs is determined by peak-period requirements. The Milling Department requires 1/3 of the

peak-period capacity and the Assembly Department requires 2/3.

32. How much fixed maintenance cost should be charged to the Assembly Department at the

end of the year for purposes of measuring performance?

12B-30

33. How much of the actual fixed maintenance cost for the year should be kept in the

Maintenance Department and not allocated to the other departments for performance evaluation

purposes?

Higuera 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 $28 per order. The Order

Fulfillment Department’s fixed costs are budgeted at $280,800 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 $152,810 and

fixed costs totaled $286,580. The Consumer Division had a total of 1,720 orders and the

Commercial Division had a total of 3,460 orders for the year.

34. How much Order Fulfillment Department cost should be allocated to the Commercial

Division at the end of the year?

35. How much actual Order Fulfillment Department cost should not be allocated to the

operating divisions at the end of the year?

36. Scuderi 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