Actual versus Budgeted Costs
Kumar, Inc., evaluates managers of producing departments on their ability to control costs. In addition to the costs directly traceable to their departments, each production manager is held responsible for a share of the costs of a support center, the Human Resources (HR) Department. The total costs of HR are allocated on the basis of actual direct labor hours used. The total costs of HR and the actual direct labor hours worked by each producing department are as follows:
Year 1 |
Year 2 |
|||
Direct labor hours worked: |
||||
Department A |
24,000 |
26,000 |
||
Department B |
36,000 |
26,000 |
||
Total hours |
60,000 |
52,000 |
||
Actual HR cost |
$160,000 |
$160,000 |
||
Budgeted HR cost |
115,000 |
* |
113,000 |
* |
*$0.25 per direct labor hour plus $100,000.
Required:
Allocate the HR costs to each producing department for Year 1 and Year 2 using the direct method with actual direct labor hours and actual HR costs.
Year 1 |
Year 2 |
|
Department A |
$______ |
$____ |
Department B |
$______ |
$_____ |
Copies Plus Print operates a copy business at two different
locations. Copies Plus Print has one support department that is
responsible for cleaning, service, and maintenance of its copying
equipment. The costs of the support department are allocated to
each copy center on the basis of total copies made.
During the first month, the costs of the support department were
expected to be $200,000. Of this amount, $60,000 is considered a
fixed cost. During the month, the support department incurred
actual variable costs of $128,000 and actual fixed costs of
$72,000.
Normal and actual activity (copies made) are as follows:
Copy Center 1 |
Copy Center 2 |
|
Normal activity (copies) |
600,000 |
400,000 |
Actual activity (copies) |
500,000 |
440,000 |
For purposes of performance evaluation, fixed costs allocated to
Copy Center 2 are:
a.$28,800.
b.$51,200.
c.$24,000.
d.$60,000.
Actual versus Budgeted Costs Kumar, Inc., evaluates managers of producing departments on their ability to control...
Kumar, Inc., evaluates managers of producing departments on their ability to control costs. In addition to the costs directly traceable to their departments, each production manager is held responsible for a share of the costs of a support center, the Human Resources (HR) Department. The total costs of HR are allocated on the basis of actual direct labor hours used. The total costs of HR and the actual direct labor hours worked by each producing department are as follows: Year...
Kumar, Inc., evaluates managers of producing departments on their ability to control costs. In addition to the costs directly traceable to their departments, each production manager is held responsible for a share of the costs of a support center, the Human Resources (HR) Department. The total costs of HR are allocated on the basis of actual direct labor hours used. The total costs of HR and the actual direct labor hours worked by each producing department are as follows:Year 1Year...
17. Albemarle, Inc., has two producing departments (X and Y). Each producing department is held responsible for a share of the costs of a support department. Actual and budgeted data are as follows: 2018 Actual Support department hours used: Department 8,000 Department Y Total hours 16,000 24,000 Support department costs: Actual support department costs Budgeted fixed support dept. costs $72,000 $24,000 Budgeted variable rate per hour $ 3.00 Normal, budgeted support department usage is 12,000 hours each for Department X...
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