Leslie Company operates a cafeteria for the benefit of its employees. The company subsidizes the cafeteria heavily by allowing employees to purchase meals at greatly reduced prices. Budgeted and actual costs in the cafeteria for the year just ended are as follows:
*Unrecovered cost after deducting amounts received from employees.Costs of the cafeteria are charged to producing departments on the basis of the number of employees in these departments. Fixed costs are charged on the basis of the percentage of peak-period requirements. Data concerning the company's producing departments follows:
Required: a. Compute the dollar amount of variable and fixed costs that should be charged to each of the producing departments at the end of the year for purposes of evaluating performance.b. Identify the amount, if any, of actual costs that should not be charged to the operating departments.

Question

Leslie Company operates a cafeteria for the benefit of its employees. The company subsidizes the cafeteria heavily by allowing employees to purchase meals at greatly reduced prices. Budgeted and actual costs in the cafeteria for the year just ended are as follows:

*Unrecovered cost after deducting amounts received from employees.Costs of the cafeteria are charged to producing departments on the basis of the number of employees in these departments. Fixed costs are charged on the basis of the percentage of peak-period requirements. Data concerning the company's producing departments follows:

Required: a. Compute the dollar amount of variable and fixed costs that should be charged to each of the producing departments at the end of the year for purposes of evaluating performance.b. Identify the amount, if any, of actual costs that should not be charged to the operating departments.

Zybrea Knight · Accepted Answer

Final Answer :

a.Budgeted rate per employee: $500,000 ÷ 800 = $625Variable costs are charged at the budgeted rate of $625 per employee. Fixed costs are charged in predetermined lump-sum amounts.

b.The remaining amounts of variable and fixed costs are variances that should not be charged:
a.Budgeted rate per employee: $500,000 ÷ 800 = $625Variable costs are charged at the budgeted rate of $625 per employee. Fixed costs are charged in predetermined lump-sum amounts. b.The remaining amounts of variable and fixed costs are variances that should not be charged:

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