Korvanis Corporation operates a Medical Services Department for its employees. Charges to the

company's operating departments for the variable costs of the Medical Services Department are

based on the actual number of employees in each department. Charges for the fixed costs of the

Medical Services Department are based on the long$-$run average number of employees in each

operating department.

Variable Medical Services Department costs are budgeted at $$57$ per employee. Fixed Medical

Services Department costs are budgeted at $$620,500$ per year. Actual Medical Services

Department costs for the most recent year were $$106,000$ for variable costs and $$626,000$ for

fixed costs. Data concerning employees in the three operating departments follow:

Budgeted number of employees

Actual number of employees for the most

recent year

Long$-$run average number of employees

Required:

Determine the Medical Services Department charges for the year to each of the operating

departments$-$Cutting, Milling, and Assembly.

How much, if any, of the actual Medical Services Department costs for the year should be

treated as a spending variance and not charged to the operating departments?

Answer is not complete.

Complete this question by entering your answers in the tabs below.