Korvanis Corporation operates a Medical Services Department that charges its variable costs to operatingdepartments based on the actual number of employees in each department. It charges fixed costs to operatingdepartments based on the long-run average number of employees.The Medical Services Department's variable costs are budgeted at $56 per employee and its fixed costs arebudgeted at $632,700 per year. Actual Medical Services Department costs for the most recent year were$106,800 for variable costs and $638,000 for fixed costs. Data concerning employees in the three operatingdepartments follow:Budgeted number of employeesCutting613Milling299Assembly912Actual number of employees for the mostrecent year513399812Long-run average number of employees6004001,000Required:1. Calculate the Medical Services Department charges to each of the operating departments-Cutting, Milling,and Assembly.2. How much, if any, of the Medical Services Department's actual costs should be treated as a spendingvariance and not charged to operating departments?

Part 1: Calculating Charges to Each Operating DepartmentThe Medical Services Department charges…

Answered: Korvanis Corporation operates a Medical…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter5: Support Department And Joint Cost Allocation

Section: Chapter Questions

Problem 2CMA: Adam Corporation manufactures computer tables and has the following budgeted indirect manufacturing...

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Korvanis Corporation operates a Medical Services Department that charges its variable costs to operating departments based on the actual number of employees in each department. It charges fixed costs to operating departments based on the long-run average number of employees. The Medical Services Department's variable costs are budgeted at $55 per employee and its fixed costs are budgeted at $609,700 per year. Actual Medical Services Department costs for the most recent year were $105,600 for variable costs and $615,000 for fixed costs. Data concerning employees in the three operating departments follow: Cutting Milling Budgeted number of employees 612 285 Assembly 915 Actual number of employees for the most recent year 512 385 815 Long-run average number of employees 630 420 1,050 Required: 1. Calculate the Medical Services Department charges to each of the operating departments-Cutting, Milling, and Assembly. 2. How much, if any, of the Medical Services Department's actual costs…
Korvanis Corporation operates a Medical Services Department for its employees. Charges to the company's operating departments for 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 $55 per employee. Fixed Medical Services Department costs are budgeted at $659,700 per year. Actual Medical Services Department costs for the most recent year were $105,100 for variable costs and $665,000 for fixed costs. Data concerning employees in the three operating departments follow: Rudgeted number of employees Actual number of employees for the most recent year Long-run average number of employees Cutting 610 510 990 Milling 287 387 660 Assembly 909 809 1,650 Required: 1. Determine the Medical Services Department charges for the…
Korvanis Corporation operates a Medical Services Department for its employees. Charges to the company's operating departments for 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 $639,300 per year. Actual Medical Services Department costs for the most recent year were $105,800 for variable costs and $645,000 for fixed costs. Data concerning employees in the three operating departments follow: Budgeted number of employees Cutting 604 Milling 293 Assembly 918 Actual number of employees for the most recent year 504 393 Long-run average number of employees 1,050 700 818 1,750 Required: 1. Determine the Medical Services Department charges for the…
Korvanis Corporation operates a Medical Services Department for its employees. Charges to the company’s operating departments for 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 $58 per employee. Fixed Medical Services Department costs are budgeted at $683,200 per year. Actual Medical Services Department costs for the most recent year were $105,800 for variable costs and $689,000 for fixed costs. Data concerning employees in the three operating departments follow: Cutting Milling Assembly Budgeted number of employees 604 287 918 Actual number of employees for the most recent year 504 387 818 Long-run average number of employees 720 480 1,200 Required: 1. Determine the Medical Services…
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SIS Technologies currently allocates insurance costs on the basis of direct labor hours. If the direct labor hours for departments A, B, and C are expected to be 3000, 9000, and 5000, respectively, this year, determine the allocation to each department based on an indirect cost budget of $34,000.
Nanda Company has two service departments, Maintenance and Personnel. Maintenance Department costs of P160,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of P40,000 are allocated based on the number of employees. The costs of operating departments A and B are P80,000 and P120,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows: Support Departments Production Departments Maintenance A B Department Budgeted costs P160,000 P40,000 P80,000 P120,000 Budgeted ΝΑ 400 480 320 maintenance-hours Number of employees 20 ΝΑ 80 240 Using the step-down method, what amount of Maintenance Department cost will be allocated to Department A if the service department with the highest percentage of interdepartmental support service is allocated first? (Round up) Personnel Department
Hanung Corp has two service departments, Maintenance and Personnel. Maintenance Department costs of $310,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $170,000 are allocated based on the number of employees. The costs of operating departments A and B are $192,000 and $288,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows: Budgeted costs Budgeted maintenance-hours Number of employees Support Departments OA $200,588 OB. $124,235 OC. $135415 OD. $74,260 Maintenance Personnel Department Department $310,000 $170,000 NA 900 Production Departments A B $192,000 $288,000 1,210 660 75 NA 660 Using the step-down method, what amount of Maintenance Department cost will be allocated to Department A if the service department with the highest percentage of interdepartmental support service is allocated first? (Do not round any intermediary calculations.) 290
Hanung Corp has two service departments, Maintenance and Personnel. Maintenance Department costs of $370,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $170,000 are allocated based on the number of employees. The costs of operating departments A and B are $216,000 and $324,000, respectively. Data on budgeted maintenance - hours and number of employees are as follows: Budgeted costs Budgeted maintenance - hours Number of employees Support Departments Maintenance Personnel Department Production Departments Department $370,000 ΝΑ A $170,000 $216,000 $324,000 800 1,270 630 B 65 ΝΑ 280 700 Using the direct method, what amount of Maintenance Department costs will be allocated to Department B? (Do not round any intermediary calculations.)
Hanung Corp has two service departments, Maintenance and Personnel. Maintenance Department costs of $370,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $120,000 are allocated based on the number of employees. The costs of operating departments A and B are $196,000 and $294,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows: Production Departments Budgeted costs $370,000 Budgeted maintenance- hours Number of employees Maintenance Personnel Department Department 200 Support Departments 90 870 A $120,000 $196,000 $294,000 15 B 1,260 670 280 680 Using the direct method, what amount of Personnel Department costs will be allocated to Department B? (Do not round any intermediary calculations.)
Blue-Pool Company is an electric utility which has two service departments, Accounting and Maintenance. It also has two operating departments, Generation and Transmission. Maintenance Department costs are allocated based on maintenance hours of service. Accounting Department costs are allocated based on accounting hours of service provided. Budgeting costs and other data for the following year are as follows: Accounting Maintenance Generation Transmission Budgeted costs R100 000 R200 000 R600 000 R400 000 Maintenance hours of service 600 7 200 4 800 Accounting hours of service 500 2 000 4 500 3 500 The step method is used to allocate service department costs, with the accounting department being allocated first. Calculate the amount of accounting department costs that needs to be allocated to the generation department. A. R42 860 B. R38 000 C. R57 143 D. R45…
River, Inc., has two producing departments. Each producing department is held responsible for a share of the costs of a support department.Actual and budgeted data are as follows: Current Year Support department hours used: Department X 10,000 Department Y 14,000 Total hours 24,000 Support department costs: Actual support department costs $72,000 Budgeted fixed service center costs $30,000 Budgeted variable rate per hour $4.00 Normal support department usage is 15,000 hours each for Department X and Department Y.Required: A. Assuming the purpose is product costing, allocate the costs of the support department using the direct method. B. Assuming the purpose is to evaluate performance, allocate the costs of the support department.

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