The medical services department of Fischer Company budgeted $25 of variable medical expenses per employee for May, based on 2,000 employees in operating departments. During May an average of 1,980 employees were employed in operating departments. Actual variable medical expenses totaled $50,700 for the month. How much variable medical expenses should be charged to operating departments at the end of May for performance evaluation purposes?

A) $50,700
B) $49,500
C) $50,000
D) $51,212

Question

Haritsiyah Nizha Niratika · Accepted Answer

Final Answer : B, Explanation :  Since the budgeted variable medical expenses per employee is $25, the total budgeted variable medical expenses for 2,000 employees would be $50,000. However, only 1,980 employees were employed in operating departments during May. Therefore, the variable medical expenses should be charged based on the actual number of employees, which would be 1,980 employees multiplied by the budgeted variable medical expenses per employee of $25. This results in a total of $49,500.

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