Lakeside Nursing Home has two operating departments, Custodial Care and Rehabilitation. It also has a Housekeeping Department that serves the two operating departments. The costs of the Housekeeping Department are all variable and are charged to the operating departments on the basis of labor-hours. Data for September follow: The budgeted costs of the Housekeeping Department for September were $24,000 and the actual costs were $29,760.How much Housekeeping Department cost should be charged to Rehabilitation at the end of September?
A) $19,840
B) $9,920
C) $9,600
D) $7,440

Question

Lakeside Nursing Home has two operating departments, Custodial Care and Rehabilitation. It also has a Housekeeping Department that serves the two operating departments. The costs of the Housekeeping Department are all variable and are charged to the operating departments on the basis of labor-hours. Data for September follow:  The budgeted costs of the Housekeeping Department for September were $24,000 and the actual costs were $29,760.How much Housekeeping Department cost should be charged to Rehabilitation at the end of September?
A) $19,840 
B) $9,920 
C) $9,600 
D) $7,440

Quizplus · Accepted Answer

To determine the cost to be charged to Rehabilitation, we need to use the labor-hours used by Rehabilitation in September.

From the table, we see that Rehabilitation used 4,800 labor-hours.

To calculate the Housekeeping Department cost to be charged to Rehabilitation:

Actual Housekeeping costs / Actual total labor-hours * Rehabilitation labor-hours

$29,760 / 24,000 * 4,800 = $9,600

Therefore, the Housekeeping Department cost to be charged to Rehabilitation at the end of September is $9,600.

Lakeside Nursing Home Has Two Operating Departments, Custodial Care and Rehabilitation