Sharp Motor Company has a cafeteria that serves two operating divisions-an Auto Division and a Truck Division. The costs of operating the cafeteria are budgeted at $87,000 per month plus $0.60 per meal served. The fixed costs of the cafeteria are determined by peak-period requirements. The Auto Division is responsible for 68% of the peak period requirements, and the Truck Division is responsible for the other 32%. For June, the Auto Division estimated it would need 94,000 meals, and the Truck Division estimated it would need 64,000 meals. However, due to unexpected layoffs of employees during the month, only 64,000 meals were served to the Auto Division. Another 64,000 meals were served to the Truck Division as planned. The cafeteria's actual fixed costs for June totaled $91,000 and its actual meal costs totaled $91,800. Required: 1. How much cafeteria cost should be charged to each division for June?
Sharp Motor Company has a cafeteria that serves two operating divisions-an Auto Division and a Truck Division. The costs of operating the cafeteria are budgeted at $87,000 per month plus $0.60 per meal served. The fixed costs of the cafeteria are determined by peak-period requirements. The Auto Division is responsible for 68% of the peak period requirements, and the Truck Division is responsible for the other 32%. For June, the Auto Division estimated it would need 94,000 meals, and the Truck Division estimated it would need 64,000 meals. However, due to unexpected layoffs of employees during the month, only 64,000 meals were served to the Auto Division. Another 64,000 meals were served to the Truck Division as planned. The cafeteria's actual fixed costs for June totaled $91,000 and its actual meal costs totaled $91,800. Required: 1. How much cafeteria cost should be charged to each division for June?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
None
Transcribed Image Text:Sharp Motor Company has a cafeteria that serves two operating divisions-an Auto Division and a Truck Division. The costs of
operating the cafeteria are budgeted at $87,000 per month plus $0.60 per meal served.
The fixed costs of the cafeteria are determined by peak-period requirements. The Auto Division is responsible for 68% of the peak-
period requirements, and the Truck Division is responsible for the other 32%.
For June, the Auto Division estimated it would need 94,000 meals, and the Truck Division estimated it would need 64,000 meals.
However, due to unexpected layoffs of employees during the month, only 64,000 meals were served to the Auto Division. Another
64,000 meals were served to the Truck Division as planned.
The cafeteria's actual fixed costs for June totaled $91,000 and its actual meal costs totaled $91,800.
Required:
1. How much cafeteria cost should be charged to each division for June?
2. Assume the company follows the practice of allocating all cafeteria costs to the divisions based on the number of meals served. On
this basis, how much cost would be allocated to each division for June?
Note: Round your intermediate calculations to 2 decimal places.
1. Total cost charged
2. Total cost allocated
Auto
Division
Truck
Division
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 18 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education