Reference no: EM131875660

Problem - Klingon Company operates a free cafeteria for the benefit of its employees. Budgeted and actual costs in the cafeteria for last year are given below:

                             Budgeted           Actual

Variable costs         $200,000          $168,000

Fixed costs             $480,000          $504,000

The variable costs of the cafeteria are allocated to operating departments on the basis of the number of employees in these departments. Data concerning last year are given below:

                                                        Machining            Assembly

Budgeted number of employees               60                     100

Actual number of employees                    40                     80

Percentage of peak-period requirements   40%                  60%

The level of budgeted fixed costs in the cafeteria is determined by the peak-period requirements.

Required:

A. Compute the dollar amount of variable and fixed cost that should have been allocated to each of the operating departments at the beginning of last year for planning purposes.

B. Compute the dollar amount of the variable and fixed costs that should have been charged to each of the operating departments at the end of last year for purposes of evaluating performance. Identify the amount, if any, of actual cafeteria costs that should not be charged to the operating departments.