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12B-32
costs of the Customer Service Department are budgeted at $29 per order. The Customer Service
Department's fixed costs are budgeted at $381,600 for the year. The fixed costs of the Customer
Service Department are determined based on the peak period orders.
At the end of the year, actual Customer Service Department variable costs totaled $219,905 and
fixed costs totaled $383,860. The Inland Division had a total of 1,520 orders and the Coast
Division had a total of 5,690 orders for the year.
Required:
a. Prepare a report showing how much of the Customer Service Department's costs should be
charged to each of the operating divisions at the end of the year.
b. How much of the actual Customer Service Department costs should not be charged to the
operating divisions at the end of the year? Who should be held responsible for these uncharged
costs?
12B-33
37. Warehouse Services is a service department in the Werner Company, providing storage
service to three operating departments. The company charges the costs of this department to
operating departments on the basis of cubic feet occupied.
Last year, Warehouse Services budgeted variable storage cost of $0.15 per cubic foot occupied.
The budgeted total fixed cost was $120,000, and was determined by the long-term storage needs
of the operating departments. Actual storage space occupied during the year, along with long-
term storage needs of operating departments, is given below:
Actual variable storage costs amounted to $0.16 per cubic foot occupied. Actual fixed storage
costs were $123,000.
Required:
a. Compute the amount of variable storage cost that should be charged to each operating
department at the end of the year for performance evaluation purposes.
b. Compute the amount of fixed storage cost that should be charged to each operating
department at the end of the year for performance evaluation purposes.
12B-34
38. Trenron, Inc. has a maintenance department that provides services to the company's two
operating departments. The variable costs of the maintenance department are charged on the
basis of the number of maintenance hours logged in each department. Last year, budgeted
variable maintenance costs were $8.60 per maintenance hour and actual variable maintenance
costs were $8.75 per maintenance hour.
The budgeted and actual maintenance hours for each operating department for last year appear
below:
Required:
a. Compute the amount of variable maintenance department cost that should have been charged
to each operating department at the end of the year for performance evaluation purposes.
b. Compute the amount of actual variable maintenance department cost that should not have
been charged to the operating departments at the end of the year for performance evaluation
purposes.
12B-35
39. Kosek 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 based on the
number of cases produced by the operating departments during the peak period. Data appear
below:
Required:
a. Prepare a report showing how much of the Maintenance Department's costs should be
charged to each of the operating divisions at the end of the year.
b. How much of the actual Maintenance Department costs should not be charged to the
operating divisions at the end of the year? Who should be held responsible for these uncharged
costs?
12B-37
40. 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:
*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 peak-period
number of employees. Data on employees in the company's producing departments follows:
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.
41. Redder Company has a purchasing department that provides services to two factories
located in Fargo and the other in Custer. Budgeted costs for the purchasing department consist
of $55,000 per year of fixed costs and $8 per purchase order for variable costs. The level of
budgeted fixed costs is determined by the peak-period requirements. The Fargo factory requires
40% of the peak-period capacity and the Custer factory requires 60%.
During the coming year, 1,800 purchase orders were processed for the Fargo factory and 2,700
purchase orders for the Custer factory.
Required:
Compute the amount of purchasing department cost that should be charged to each factory for
the year.
12B-40
42. Zindell Corporation has two operating divisions-a North Division and a South Division.
The company's Logistics Department services both divisions. The variable costs of the Logistics
Department are budgeted at $33 per shipment. The Logistics Department's fixed costs are
budgeted at $369,200 for the year. The fixed costs of the Logistics Department are determined
based on peak-period demand.
At the end of the year, actual Logistics Department variable costs totaled $307,050 and fixed
costs totaled $374,720. The North Division had a total of 3,900 shipments and the South Division
had a total of 5,000 shipments for the year.
Required:
a. Prepare a report showing how much of the Logistics Department's costs should be charged to
each of the operating divisions at the end of the year.
b. How much of the actual Logistics Department costs should not be charged to the operating
divisions at the end of the year? Who should be held responsible for these uncharged costs?
