Assume a company has only one service department and two operating departments (A and B). The service department's budgeted variable costs in total and on a per unit basis were $200,000 and $5, respectively. Its total actual variable costs were $205,500. The service department's budgeted and actual fixed costs were $300,000 and $310,500, respectively. The service department's variable costs are allocated to the operating departments based on actual number of employees for the current year, whereas its fixed costs are allocated based on the long-run average number of employees in the operating departments. The following additional information was provided for Departments A and B: Actual number of employees for the current year Long-run average number of employees Department A 9,000 12,000 Department B 30,000 32,000 The total amount of service department costs that should not be charged to either department is closest to:

Assume a company has only one service department and two operating departments (A and B). The service department's budgeted variable costs in total and on a per unit basis were $200,000 and $5, respectively. Its total actual variable costs were $205,500. The service department's budgeted and actual fixed costs were $300,000 and $310,500, respectively. The service department's variable costs are allocated to the operating departments based on actual number of employees for the current year, whereas its fixed costs are allocated based on the long-run average number of employees in the operating departments. The following additional information was provided for Departments A and B: Actual number of employees for the current year Long-run average number of employees Department A 9,000 12,000 Department B 30,000 32,000 The total amount of service department costs that should not be charged to either department is closest to:

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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