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Business, 16.04.2020 21:38 gporter9200

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 $80 per employee. Fixed Medical Services Department costs are budgeted at $400,000 per year. Actual Medical Services Department costs for the most recent year were $41,000 for variable costs and $408,000 for fixed costs. Data concerning employees in the three operating departments follow: Cutting Milling Assembly Budgeted number of employees 170 100 280 Actual number of employees for the most recent year 150 80 270 Long-run average number of employees 180 120 300 Required: 1. Determine the Medical Services Department charges for the year to each of the operating departments—Cutting, Milling, and Assembly. 2. How much, if any, of the actual Medical Services Department costs for the year should be treated as a spending variance and not charged to the operating departments?

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Korvanis Corporation operates a Medical Services Department for its employees. Charges to the compan...
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