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…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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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TBBSBM764 Corporation's delivery department provides service for two operating departments of the company. Variable costs of the TBBSBM764's delivery department are allocated based on the number of deliveries made to each department in a given period. TBBSBM764's delivery department's fixed costs are budgeted to be 25% of total costs and are allocated based on the peak period needs of each operating department. Data for last year are given below: Delivery Department: Actual Fixed Costs Actual Variable Costs (ID#346818) Total Budgeted Costs $19,410 $40,590 $48,000 Peak period needs Actual deliveries Budgeted deliveries Operating Dept 1 10,000 deliveries 8,958 8,000 Operating Dept 2 5,000 deliveries 3,452 4,000 Q.) What amount of the TBBSBM764's delivery department's actual costs should not be allocated to the operating departments? A.) $ Prev 1 of 25 Next > MacBook Air
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.)
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.
The fixed costs of operating the Bunatta Corp. are $4,800,000 annually. Variable costs are incurred at the rate of $25 per maintenance-hour. On average, the company incurs 38,000 maintenance-hours per year. Budgeted and actual hours per user for 2019 are as follows: Assume that budgeted maintenance-hours are used to calculate the allocation rates. Using a single-rate allocation and budgeted usage, how much will each department be allocated? Using a dual-rate allocation with fixed costs allocated according to budgeted hours and variable costs allocated to actual hours, how much overhead will each department be allocated?
Mangiamele 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 budgeted based on the number of cases produced by the operating departments during the peak period. Data appear below: Maintenance Department: Budgeted variable cost Budgeted total fixed cost $ 4 per case $ 693,000 Paints Division: 30% Percentage of peak period capacity required Actual cases 18,000 Stains Division: 70% Percentage of peak period capacity required Actual cases 59,000 For performance evaluation purposes, how much Maintenance Department cost should be charged to the Paints Division at the end of the year? A. $234,000 B. $500,500 C. $279,900 D. $300,300
The following information applies to the questions displayed below.] Adger Corporation is a service company that measures its output based on the number of customers served. The company provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results for May as shown below: Fixed Elementper Month Variable Element per Customer Served Actual Totalfor May Revenue $ 5,400 $ 226,000 Employee salaries and wages $ 61,000 $ 2,200 $ 158,700 Travel expenses $ 530 $ 20,700 Other expenses $ 40,000 $ 38,000 When preparing its planning budget the company estimated that it would serve 40 customers per month; however, during May the company actually served 45 customers. 13. What amount of other expenses would be included in Adger’s planning budget for May? - What activity variance would Adger report in May with respect to its revenue? (Indicate the effect of each variance by selecting "F" for favorable, "U"…

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