Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Sharp Motor Company has a cafeteria that serves two operating divisions - an Auto Division and a Truck Division. The costs of operating the cafeteria

image text in transcribed
Sharp Motor Company has a cafeteria that serves two operating divisions-an Auto Division and a Truck Division. The costs of
operating the cafeteria are budgeted at $82,000 per month plus $0.60 per meal served.
The fixed costs of the cafeteria are determined by peak-period requirements. The Auto Division is responsible for 69% of the peak-
period requirements, and the Truck Division is responsible for the other 31%.
For June, the Auto Division estimated it would need 85,000 meals, and the Truck Division estimated it would need 55,000 meals.
However, due to unexpected layoffs of employees during the month, only 55,000 meals were served to the Auto Division. Another
55,000 meals were served to the Truck Division as planned.
The cafeteria's actual fixed costs for June totaled $88,000 and its actual meal costs totaled $81,000.
Required:
How much cafeteria cost should be charged to each division for June?
Assume the company follows the practice of allocating all cafeteria costs to the divisions based on the number of meals served. On
this basis, how much cost would be allocated to each division for June?
Note: Round your intermediate calculations to 2 decimal places.
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting Tools for Business Decision Making

Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine

7th Canadian edition

1119368456, 978-1119211587, 1119211581, 978-1119320623, 978-1119368458

More Books

Students also viewed these Accounting questions

Question

introduction to accounting

Answered: 1 week ago