Korvanis Corporation operates a Medical Services Department for its employees. Charges to the company's operating departments...
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Korvanis Corporation operates a Medical Services Department for its employees. Charges to the company's operating departments fo 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 $60 per employee. Fixed Medical Services Department costs are budgeted at $642,000 per year. Actual Medical Services Department costs for the most recent year were $106,300 for variable costs and $648,000 for fixed costs. Data concerning employees in the three operating departments follow: Cutting Budgeted number of employees 602 Actual number of employees for the most recent year Long-run average number of employees 502 Milling 283 383 Assembly 900 800 1,110 740 1,850 Required: 1. Determine the Medical Services Department charges for the year to each of the operating departments-Cutting, Milling, and Assembly. 2. How much, if any, of the actual Medical Services Department costs for the year should be treated as a spending variance and not charged to the operating departments? Korvanis Corporation operates a Medical Services Department for its employees. Charges to the company's operating departments fo 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 $60 per employee. Fixed Medical Services Department costs are budgeted at $642,000 per year. Actual Medical Services Department costs for the most recent year were $106,300 for variable costs and $648,000 for fixed costs. Data concerning employees in the three operating departments follow: Cutting Budgeted number of employees 602 Actual number of employees for the most recent year Long-run average number of employees 502 Milling 283 383 Assembly 900 800 1,110 740 1,850 Required: 1. Determine the Medical Services Department charges for the year to each of the operating departments-Cutting, Milling, and Assembly. 2. How much, if any, of the actual Medical Services Department costs for the year should be treated as a spending variance and not charged to the operating departments?
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Related Book For
Managerial Accounting
ISBN: 9781260247787
17th Edition
Authors: Ray Garrison, Eric Noreen, Peter Brewer
Posted Date:
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