Question
what is total cost charged and allocated for autodivision and truck division
Sharp Motor Company has two operating divisions-an Auto Division and a Truck Division. The company has a cafeteria that serves the employeos of both divisions. The costs of operating the cafetoria are budgeted at $81,000 per month plus $0.60 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 71% of the peak-period requirements, and the Truck Division is responsible for the other 29%. For June, the A Division estimated that it would need 92,000 meals served, and the Truck Division estimated that it would need 62,000 meals served. However, due to unexpected layoffs of employees during he month, only 62.000 meals were served to the Auto Division. Another 62,000 meals were served to the Truck Division as planned Cost records in the cafeteria show that actual fixed costs for June totaled $85,000 and that actual meal costs totaled $92,400. Required: 1. How much cafeteria cost should be charged to each division for June? Division Division Total cost charged 2 Assume that the company follows the practice of allocating all cafeteria costs incurred each month to the practice of allocating all cafeteria costs incurred each month to the divisions in proportion to the number of meais 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 two decimal places.) Auto DivisionDivision Total cost allocated
Explanation / Answer
(2)
Total cost allocated
(85,000+92,400)×1/2
Auto division truck division Fixed cost 81,000@71%, 29% 57,510 23,490 Variable 62,000@.60 37,200 37,200 Total cost charges 94,710 60,690
