Sagnik B.

asked • 01/15/15

Operating Division Allocation Question Need Help

Boudrie Corporation's Maintenance Department provides services to the company's two operating divisions : the Paints Division and the Stains Division. The variable costs of the Maintenance Department are budgeted based on the number of cases produced by the operating departments. The fixed costs of the Maintenance Department are determined by the number of cases produced by the operating departments during the peak period. Data appear below :
 
Maintenance Department :
 
Budgeted Variable Cost : $3 per case
Budgeted Total Fixed Cost : $704,000
Actual Total Variable Cost : $281,632
Actual Total Fixed Cost : $709,030
 
Paints Division :
 
Percentage of Peak Capacity Required : 45%
Budgeted Cases : 29,000
Actual Cases : 29,020
 
Stains Division :
 
Percentage of Peak Capacity Required : 55%
Budgeted Cases : 59,000
Actual Cases : 58,990
 
Question : How much actual Maintenance Department cost should NOT be allocated to the operating divisions at the end of the year ?
 
A) $22,632 B) $0 C) $17,602 D) $5,030 E) None
 
I believe answer was A) but either way, I need help with steps as to the answer and why.

1 Expert Answer

By:

Sam L H. answered • 10/10/15

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