Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Sharp Motor Company has two operating divisionsan Auto Division and a Truck Division. The company has a cafeteria that serves the employees of both

image text in transcribed

Sharp Motor Company has two operating divisionsan Auto Division and a Truck Division. The company has a cafeteria that serves the employees of both divisions. The costs of operating the cafeteria are budgeted at $88,000 per month plus $0.50 per meal served. The company pays all the cost of the meals. The fixed costs of the cafeteria are determined by peak-period requirements. The Auto Division is responsible for 61% of the peak-period requirements, and the Truck Division is responsible for the other 39%. For June, the Auto Division estimated it would need 91,000 meals served, and the Truck Division estimated it would need 61,000 meals served. However, due to unexpected layoffs of employees during the month, only 61,000 meals were served to the Auto Division. Another 61,000 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 $76,000. Required: 1. How much cafeteria cost should be charged to each division for June? 2. Assume the company follows the practice of allocating all cafeteria costs incurred each month to the divisions in proportion to the number of meals served to each division during the month. On this basis, how much cost would be allocated to each division for June? (Round your intermediate calculations to 2 decimal places.) Auto Division Truck Division 1. Total cost charged 2. Total cost allocated

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

Authors: Robert Libby, Patricia Libby, Daniel Short, George Kanaan, M

5th Canadian edition

9781259105692, 978-1259103285

More Books

Students also viewed these Accounting questions