Korvanis Corporation operates a Medical Services Department for its employees. C
ID: 2591716 • Letter: K
Question
Korvanis Corporation operates a Medical Services Department for its employees. Charges to the company's operating departments for 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 $55 per employee. Fixed Medical Services Department costs are budgeted at $629,200 per year. Actual Medical Services Department costs for the most recent year were $106,800 for variable costs and $635,000 for fixed costs.Data concerning employees in the three operating departments follow: Carling Budgeted number of employees Actual number of employees for the most recent year Long-run average number of employees 618 518 1,050 296 396 700 908 808 1,750 1. Determine the Medical Services Department charges for the year to each of the operating departments-Cutting, Milling, and Assembly. Cutting Milling Assembly Medical services department charges 2. How much, if any, of the actual Medical Services Department costs for the year should not be charged to the operating departments? harged costExplanation / Answer
Answer 1
Calculation of percentage of Long-run average number of employees allocated to different operating deparment
Computation of Medical services department charges
Answer 2
Actual Medical services department not to be charged to operating departments = Total actual cost - Total cost allocated or charges
.Total actual cost (given in question) = $106,800 + $635,000 = $741,800
Total cost allocated or charges (As computed in answer 1) = $217,250 + $147,620 +$359,040 = $723,910
Operating Department Long-run average number of employees % Cutting Department 1,050 30 % Milling Department 700 20 % Assembly Department 1,750 50 % Total 3,500 100 %Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.