Problem 11-22 (Algo) Service Department Charges [LO11-4] Sharp Motor Company has a cafeteria that serves two operating divisions-an Auto Division and a Truck Division. The costs of operating the cafeteria are budgeted at $72,000 per month plus $0.60 per meal served. The fixed costs of the cafeteria are determined by peak-period requirements. The Auto Division is responsible for 63% of the peak- period requirements, and the Truck Division is responsible for the other 37%. For June, the Auto Division estimated it would need 84,000 meals, and the Truck Division estimated it would need 54,000 meals. However, due to unexpected layoffs of employees during the month, only 54,000 meals were served to the Auto Division. Another 54,000 meals were served to the Truck Division as planned. The cafeteria's actual fixed costs for June totaled $75,000 and its actual meal costs totaled $82,800.

Problem 11-22 (Algo) Service Department Charges [LO11-4] Sharp Motor Company has a cafeteria that serves two operating divisions-an Auto Division and a Truck Division. The costs of operating the cafeteria are budgeted at $72,000 per month plus $0.60 per meal served. The fixed costs of the cafeteria are determined by peak-period requirements. The Auto Division is responsible for 63% of the peak- period requirements, and the Truck Division is responsible for the other 37%. For June, the Auto Division estimated it would need 84,000 meals, and the Truck Division estimated it would need 54,000 meals. However, due to unexpected layoffs of employees during the month, only 54,000 meals were served to the Auto Division. Another 54,000 meals were served to the Truck Division as planned. The cafeteria's actual fixed costs for June totaled $75,000 and its actual meal costs totaled $82,800.

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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How much is the over/underapplied FOH? Indicate whether over/underapplied. Ex. 123456 Overapplied or 123456 Underapplied A company manufactures plastic products for the home and restaurant market. The company also does contract work for other customers and utilizes a job order costing system. The flexible budget covering next years' expected range of activity is: 50,000 40,000 80,000 64,000 P100,000 P160,000 P220,000 150,000 Р250,000 Р310,000 Р370,000 Direct Labor Hours 110,000 88,000 Machine Hours Variable OH Costs Fixed OH Costs 150,000 150,000 Total OH Costs A predetermined overhead rate is based on direct labor hours is used to apply total overhead. Management has estimated that 100,000 direct labor hours will be used next year. At the end of the year, actual direct labor hours for the year were 112,375 hours and the actual manufacturing overhead for the year was P412,525.
Activity-Based Flexible Budgeting Foy Company has a welding activity and wants to develop a flexible budget formula for the activity. The following resources are used by the activity: • Four welding units, with a lease cost of $11,000 per year per unit • Six welding employees each paid a salary of $51,000 per year (A total of 12,000 welding hours are supplied by the six workers.) • Welding supplies: $400 per job • Welding hours: 4 hours used per job During the year, the activity operated at 85 percent of capacity and incurred the following actual activity and resource costs. • Lease cost: $44,000 • Salaries: $321,300 • Parts and supplies: $1,014,900 1. Prepare a performance report for the welding activity. In the last column of Foy Company Activity-Based Performance Report, if variance amount is unfavorable select "U" , select "F", if it is Favorable and select "NA" if there is no variance. Foy Company Activity-Based Performance Report Activity Actual Cost Budgeted Cost…
Exercise 11-4 (Algo) Service Department Charges [LO11-4] Hannibal Steel Company has a Transport Services Department that provides trucks to haul ore from the company’s mine to its two steel mills—the Northern Plant and the Southern Plant. Budgeted costs for the Transport Services Department total $168,700 per year, consisting of $0.17 per ton variable cost and $118,700 fixed cost. The level of fixed cost is determined by peak-period requirements. During the peak period, the Northern Plant requires 57% of the Transport Services Department’s capacity and the Southern Plant requires 43%. During the year, the Transport Services Department actually hauled 116,000 tons of ore to the Northern Plant and 51,500 tons to the Southern Plant. The Transport Services Department incurred $370,000 in cost during the year, of which $53,000 was variable cost and $317,000 was fixed cost. Required: 1. How much of the Transport Services Department’s variable costs should be charged to each plant? 2.…
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Problem 11-22 (Algo) Service Department Charges [LO11-4] Sharp Motor Company has a cafeteria that serves two operating divisions-an Auto Division and a Truck Division. The costs of operating the cafeteria are budgeted at $87,000 per month plus $0.80 per meal served. The fixed costs of the cafeteria are determined by peak-period requirements. The Auto Division is responsible for 63% of the peak- period requirements, and the Truck Division is responsible for the other 37%. For June, the Auto Division estimated it would need 81,000 meals, and the Truck Division estimated it would need 51,000 meals. However, due to unexpected layoffs of employees during the month, only 51,000 meals were served to the Auto Division. Another 51,000 meals were served to the Truck Division as planned. The cafeteria's actual fixed costs for June totaled $96,000 and its actual meal costs totaled $99,600. Required: 1. How much cafeteria cost should be charged to each division for June? 2. Assume the company…
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