Frame 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 determined by the number of cases produced by the operating departments during the peak-period. Data appear below:
Maintenance Department: |
|||
Budgeted variable cost |
$ |
6 |
per case |
Budgeted total fixed cost |
$ |
328,000 |
|
Actual total variable cost |
$ |
254,014 |
|
Actual total fixed cost |
$ |
331,940 |
|
Paints Division: |
|||
Percentage of peak-period capacity required |
35 |
% |
|
Budgeted cases |
12,000 |
||
Actual cases |
12,010 |
||
Stains Division: |
|||
Percentage of peak-period capacity required |
65 |
% |
|
Budgeted cases |
29,000 |
||
Actual cases |
28,960 |
||
How much Maintenance Department cost should be allocated to the Stains Division at the end of the year?
$395,313
$414,187
$405,610
$386,960
D. $386,960
Stains Division Allocation = ($6 x 28,960) + (65% x $328,000) = $386,960
Frame Corporation's Maintenance Department provides services to the company's two operating divisions--the Paints Division and the...
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