Reference no: EM133052250

Question - Service Department Charges: Anibo Aviation Services has two operating divisions - Airframe Division and Powerplant Division. The company has a snack bar that serves the employees of both divisions. The costs of operating the snack bar are budgeted at $87,000 per month plus $0.90 per meal served. The company pays all the cost of the meals.

The fixed costs of the snack bar are determined by peak-period requirements. The airframe Division is responsible for 58% of the peak-period requirements, and the Powerplant Division is responsible for the other 42%.

For June, the Airframe Division estimated it would need 84,000 meals served, and the Powerplant Division estimated it would need 54,000 meals served. However, due to unexpected layoffs of employees during the month, only 54,000 meals were served to the Airframe Division. Another 54,000 meals were served to the Powerplant Division as planned.

The snack bar's actual fixed costs for June totaled $94,000 and its actual meal costs totaled $116,200.

1. How much snack bar cost should be charged to each division for June?

2. Assume the company follows the practice of allocating all snack bar costs incurred each month to the divisions in proportion to the number of meals served to each division during the month. On this basis, how much cost would be allocated to each division for June?