(Appendix 12B)The Bolton Company operates a Health Care service department for its employees.The variable costs of this department are charged to the company's two operating departments, Assembly and Finishing, based on the number of employees in each department.The Health Care Department's total variable cost was budgeted at $55, 000 for the past year;its actual total variable cost was $56, 112.Additional data for the past year follow: How much Health Care variable cost should be charged to Finishing at the end of the year?
A)$21, 670
B)$22, 000
C)$22, 064
D)$22, 400

Question

(Appendix 12B)The Bolton Company operates a Health Care service department for its employees.The variable costs of this department are charged to the company's two operating departments, Assembly and Finishing, based on the number of employees in each department.The Health Care Department's total variable cost was budgeted at $55, 000 for the past year;its actual total variable cost was $56, 112.Additional data for the past year follow:  How much Health Care variable cost should be charged to Finishing at the end of the year?
A)$21, 670 
B)$22, 000 
C)$22, 064 
D)$22, 400

Quizplus · Accepted Answer

Budgeted rate for variable cost = Total budgeted cost ÷ Total budgeted activity
= $55, 000 ÷ (300 employees + 200 employees)= $110 per employee
Variable charges = Budgeted rate for variable cost × Actual activity
= $110 per employee × 197 employees = $21, 670

(Appendix 12B)The Bolton Company Operates a Health Care Service Department