Chapter 11B - Solution Manual

Chapter 11B - Solution Manual - Chapter 11B Service...

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Chapter 11B Service Department Charges Appendix 11B Service Department Charges Exercise 11B-1  (20 minutes) 1. Long-Run Average  Number of  Employees Percentage Cutting Department. ...... 600 30% Milling Department. ........ 400 20% Assembly Department. .. 1,000   50     % Total. .............................. 2,000 100 % Cutting Milling Assembl y Variable cost charges: $60 per employee × 500 employees $ 30,000 $60 per employee × 400 employees $ 24,000 $60 per employee × 800 employees $ 48,000 Fixed cost charges: 30% × $600,000. .............................. 180,000 20% × $600,000. .............................. 120,000 50% × $600,000. ..............................                                                   300,000     Total charges. ...................................... $210,000 $144,000 $348,000 2. Part of the total actual cost is not charged to the operating departments  as shown below: Variable  Cost Fixed  Cost Total Total actual costs incurred. ............... $105,400 $605,000 $710,400 Total charges. ...................................   102,000       600,000       702,000     Spending variance. .......................... $       3,400     $      5,000     $      8,400     11B-1
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Chapter 11B Service Department Charges The overall spending variance of $8,400 represents costs incurred in  excess of the budgeted variable cost of $60 per employee and the  budgeted fixed cost of $600,000. This $8,400 in uncharged costs is the  responsibility of the Medical Services Department. 11B-2
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Chapter 11B Service Department Charges Exercise 11B-2  (20 minutes) 1. Men’s Women’s Shoes House- wares Total Percentage of 2010 sales. ............................ 8% 40% 28% 24% 100% Allocation of 2010 fixed administrative  expenses (based on the above  percentages). ............................................ $ 72,000 $360,000 $252,000 $216,000 $900,000 2. 2010 allocation (above). ............................... $ 72,000 $360,000 $252,000 $216,000 $900,000 2009 allocation. ............................................     90,000       225,000       315,000         270,000       900,000     Increase (decrease) in allocation. ................ $(18,000 ) $135,000 $      (63,000     ) $      (54,000     ) $                      0   
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Chapter 11B - Solution Manual - Chapter 11B Service...

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