Fundamentals of Cost Accounting
6th Edition
ISBN: 9781260708783
Author: LANEN, William
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 17, Problem 47P
Performance Evaluation in Service Industries
Bay Area Bank estimates that its
During the period, actual costs related to new accounts amounted to $572,250. The bank sold a total of 19,200 new accounts.
The cost of maintaining existing accounts was $18,000. Had these costs been incurred at the same prices as were in effect when the budget was prepared, the costs would have been $17,700; however, some costs changed. Also, deposits averaged $45,000,000 during the period.
Required
Prepare a schedule to show the differences between
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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?
The fixed costs of operating the Srepta 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:
Budgeted hours
Actual hours
Building and grounds
10,000
9,800
Administration
2,500
1,600
Customer Service
18,000
22,500
IT support
7,500
7,800
Total
38,000
41,700
Assume that budgeted maintenance-hours are used to calculate the allocation rates.
1. Using a single-rate allocation and budgeted usage, how much will each department be allocated?
2. 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?
Arberg Company’s controller prepared the following budgeted income statement for the coming year:
Sales
$417,000
Variable cost
287,730
Contribution margin
$129,270
Fixed cost
75,950
Operating income
$53,320
2. Suppose Arberg’s actual revenues are $29,900 more than budgeted. By how much will operating income increase?
Chapter 17 Solutions
Fundamentals of Cost Accounting
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