Question
Sharp Motor Company has a cafeteria that serves two operating divisionsan Auto Division and a Truck Division. The costs of operating the cafeteria are budgeted
Sharp Motor Company has a cafeteria that serves two operating divisionsan Auto Division and a Truck Division. The costs of operating the cafeteria are budgeted at $85,000 per month plus $0.50 per meal served.
The fixed costs of the cafeteria are determined by peak-period requirements. The Auto Division is responsible for 72% of the peak-period requirements, and the Truck Division is responsible for the other 28%.
For June, the Auto Division estimated it would need 90,000 meals, and the Truck Division estimated it would need 60,000 meals. However, due to unexpected layoffs of employees during the month, only 60,000 meals were served to the Auto Division. Another 60,000 meals were served to the Truck Division as planned.
The cafeteria's actual fixed costs for June totaled $92,000 and its actual meal costs totaled $79,000.
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.
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