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Managerial Accounting for Managers Study Set 3

Business

Quiz 22 :

Service Department Charges

Quiz 22 :

Service Department Charges

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For performance evaluation purposes, the fixed costs of a service department should be charged to operating departments using:
Free
Multiple Choice
Answer:

Answer:

C

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Mangiamele Corporation's Maintenance Department provides services to the company's two operating divisions--the Paints Division and the Stains Division. The variable costs of the Maintenance Department are budgeted based on the number of cases produced by the operating departments. The fixed costs of the Maintenance Department are budgeted based on the number of cases produced by the operating departments during the peak period. Data appear below: img For performance evaluation purposes, how much Maintenance Department cost should be charged to the Paints Division at the end of the year?
Free
Multiple Choice
Answer:

Answer:

C
Explanation: img

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The long-run average or peak period needs of operating departments would be the most suitable base for allocating:
Free
Multiple Choice
Answer:

Answer:

B

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Fox Company has the following data concerning the machine-hours in its operating departments: img Fixed costs of the maintenance department are budgeted at $30,000 per year. The fixed maintenance costs are incurred in order to service long-run average demand. The actual fixed maintenance cost was actually $32,000. How much fixed maintenance cost should be charged to Department B at the end of the year for performance evaluation purposes?
Multiple Choice
Answer:
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Whenever possible, service department costs should be separated into fixed and variable costs and charged separately to operating departments.
True False
Answer:
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Macumber Corporation has two operating divisions--an Atlantic Division and a Pacific Division. The company's Logistics Department services both divisions. The variable costs of the Logistics Department are budgeted at $36 per shipment. The Logistics Department's fixed costs are budgeted at $234,000 for the year. The fixed costs of the Logistics Department are determined based on peak-period demand. img How much Logistics Department cost should be charged to the Atlantic Division at the end of the year for performance evaluation purposes?
Multiple Choice
Answer:
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Tabarez Corporation's Maintenance Department provides services to the company's two operating divisions--the Paints Division and the Stains Division. The variable costs of the Maintenance Department are budgeted based on the number of cases produced by the operating departments. The fixed costs of the Maintenance Department are budgeted based on the number of cases produced by the operating departments during the peak period. Data appear below: img For performance evaluation purposes, how much Maintenance Department cost should be charged to the Stains Division at the end of the year?
Multiple Choice
Answer:
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Schabel Corporation has two operating divisions--a Consumer Division and a Commercial Division. The company's Customer Service Department provides services to both divisions. The variable costs of the Customer Service Department are budgeted at $72 per order. The Customer Service Department's fixed costs are budgeted at $695,400 for the year. The fixed costs of the Customer Service Department are determined based on the peak period orders. img At the end of the year, actual Customer Service Department variable costs totaled $891,089 and fixed costs totaled $709,820. The Consumer Division had a total of 2,610 orders and the Commercial Division had a total of 9,580 orders for the year. For performance evaluation purposes, how much actual Customer Service Department cost should NOT be charged to the operating divisions at the end of the year?
Multiple Choice
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For performance evaluation purposes, the actual fixed costs of a service department should be charged to the departments that consume the service in proportion to the actual services provided to the consuming departments during the period.
True False
Answer:
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Which of the following companies is following a policy with respect to the costs of service departments that is not recommended?
Multiple Choice
Answer:
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Gretter Corporation has two operating divisions--an Atlantic Division and a Pacific Division. The company's Logistics Department services both divisions. The variable costs of the Logistics Department are budgeted at $36 per shipment. The Logistics Department's fixed costs are budgeted at $399,600 for the year. The fixed costs of the Logistics Department are determined based on peak-period demand. img At the end of the year, actual Logistics Department variable costs totaled $305,040 and fixed costs totaled $418,680. The Atlantic Division had a total of 2,600 shipments and the Pacific Division had a total of 5,600 shipments for the year. For performance evaluation purposes, how much actual Logistics Department cost should NOT be charged to the operating divisions at the end of the year?
Multiple Choice
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Oaks Company maintains a cafeteria for its employees. For June, variable food costs were budgeted at $48 per employee based on a budgeted level of 1,000 employees in other departments. During the month, an average of 1,100 employees worked in other departments. The cafeteria's total food costs for the month came to $57,750. How much food cost should be charged to the other departments at the end of the month for performance evaluation purposes?
Multiple Choice
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In service department cost allocations, sales dollars should be used as an allocation base whenever possible.
True False
Answer:
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Levar Corporation has two operating divisions--a Consumer Division and a Commercial Division. The company's Order Fulfillment Department provides services to both divisions. The variable costs of the Order Fulfillment Department are budgeted at $73 per order. The Order Fulfillment Department's fixed costs are budgeted at $470,400 for the year. The fixed costs of the Order Fulfillment Department are determined based on the peak period orders. img At the end of the year, actual Order Fulfillment Department variable costs totaled $621,600 and fixed costs totaled $473,970. The Consumer Division had a total of 1,840 orders and the Commercial Division had a total of 6,560 orders for the year. For purposes of evaluation performance, how much Order Fulfillment Department cost should be charged to the Commercial Division at the end of the year?
Multiple Choice
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For performance evaluation purposes, any variance over budgeted fixed costs in a service department should be the responsibility of the service department and should not be charged to the departments that use the service.
True False
Answer:
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Variable service department costs should be charged to operating departments at the end of the period according to the formula:
Multiple Choice
Answer:
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For performance evaluation purposes, variable service department costs should be charged to operating departments in predetermined, lump-sum amounts.
True False
Answer:
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All charges for services computed using budgeted rather than actual rates should be removed from an operating department's performance report.
True False
Answer:
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Since sales dollars represents "ability to pay," it is superior to most other bases used for allocating or charging service department costs.
True False
Answer:
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The medical services department of Fischer Company budgeted $25 of variable medical expenses per employee for May, based on 2,000 employees in operating departments. During May an average of 1,980 employees were employed in operating departments. Actual variable medical expenses totaled $50,700 for the month. How much variable medical expenses should be charged to operating departments at the end of May for performance evaluation purposes?
Multiple Choice
Answer:
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