Korvanis Corporation operates a Medical Services Department for its employees. Charges to the companys 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 $58 per employee. Fixed Medical Services Department costs are budgeted at $687,500 per year. Actual Medical Services Department costs for the most recent year were $106,900 for variable costs and $693,000 for fixed costs. Data concerning employees in the three operating departments follow:

	Cutting	Milling	Assembly
Budgeted number of employees	606	280	916
Actual number of employees for the most recent year	506	380	816
Long-run average number of employees	1,200	800	2,000

Required:

1. Determine the Medical Services Department charges for the year to each of the operating departmentsCutting, Milling, and Assembly.

2. How much, if any, of the actual Medical Services Department costs for the year should not be charged to the operating departments?