Dempsey Manufacturing operates a cafeteria for the benefit of all employees. The cost of operating the cafeteria
Question:
Dempsey Manufacturing operates a cafeteria for the benefit of all employees. The cost of operating the cafeteria is allocated to the operating departments on the basis of number of employees in the respective departments. Budgeted and actual data for operating the cafeteria during the previous month are shown as follows:
Required A. For purposes of allocating cafeteria service costs, should budgeted or actual cost be used? Explain your answer.
B. Determine the amount of cafeteria service costs that should be allocated to each of the four operating departments.
C. How should cafeteria service costs be treated when evaluating the costs of each of the four operating departments for purposes of comparing actual to planned performance?
D. How should cafeteria service costs be treated by receiving and administration if these service department costs are also allocated to assembly and machining?
Step by Step Answer:
Managerial Accounting Information For Decisions
ISBN: 9780324222432
4th Edition
Authors: Thomas L. Albright , Robert W. Ingram, John S. Hill