The Copy Center is a service department for the operating departments Foster School of Business, which includes the Accounting Department. Rates for usage of the Copy Center for the Accounting Department for 2020 are below: Fixed Cost $43,000 Budgeted Variable Cost $0.38 per page These budgeted costs are used to determine the transfer price that other departments will pay for their usage of the Copy Center Service Department. Due to an error in the budgeted the price of ink, the Copy Center service department now incurs a cost of $0.74 per page. How much should the Foster Accounting Department be charged for the year if it printed 500 copies during 2020?
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
1.
The Copy Center is a service department for the operating departments Foster School of Business, which includes the Accounting Department. Rates for usage of the Copy Center for the Accounting Department for 2020 are below:
| Fixed Cost | $43,000 |
| Budgeted Variable Cost | $0.38 per page |
These budgeted costs are used to determine the transfer price that other departments will pay for their usage of the Copy Center Service Department. Due to an error in the budgeted the price of ink, the Copy Center service department now incurs a cost of $0.74 per page.
How much should the Foster Accounting Department be charged for the year if it printed 500 copies during 2020?
2.
Chipotle is deciding whether to continue making guacamole in the restaurant or buy it from an outside supplier. Chipotle's cost information is as follows (unit is a tub full of guacamole):
| Cost per Unit | |
| Direct Materials | $9.78 |
| Direct Labor | $4.14 |
| Variable Overhead | $2.41 |
| Worker Salary | $6.59 |
| $1.09 | |
| Allocated General Overhead | $1.29 |
Assume the avocado peeler has a salvage value of $0 and cannot be used for any other purpose. Assume all direct labor is variable and the worker can be terminated.
What is the total per unit relevant cost of producing guacamole that Chipotle should consider in its decision?
Round your answer to the nearest cent.
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