Asked by Chae-Lynn Normore on Jun 15, 2024
Verified
Oaks Company maintains a cafeteria for its employees. For June, variable food costs were budgeted at $48 per employee based on a budgeted level of 1,000 employees in other departments. During the month, an average of 1,100 employees worked in other departments. The cafeteria's total food costs for the month came to $57,750. How much food cost should be charged to the other departments at the end of the month for performance evaluation purposes?
A) $57,750
B) $52,500
C) $48,000
D) $52,800
Variable Food Costs
Variable food costs change with the level of production or sales, such as the cost of ingredients for a restaurant.
Performance Evaluation
The process of assessing the efficiency and effectiveness of employees, departments, or organizations, often for the purpose of making decisions related to promotions, compensations, and training.
Other Departments
A general term that refers to various separate units or divisions within a company, each responsible for specific functions or operations not specified by previous terms.
- Quantify and review the consequences of real vs. budget expenses and tasks on department charges.
- Examine the contribution of service departments to a company and the process of assigning their costs to the departments that operate directly.
Verified Answer
Actual number of employees in other departments = 1,100
Total variable food cost = 48*1,100 = $52,800
Therefore, the amount charged to other departments for performance evaluation purposes should be $52,800.
Learning Objectives
- Quantify and review the consequences of real vs. budget expenses and tasks on department charges.
- Examine the contribution of service departments to a company and the process of assigning their costs to the departments that operate directly.
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