Please explain how to get the answer Birch Corporation\'s Maintenance Department
ID: 2487393 • Letter: P
Question
Please explain how to get the answer Birch Corporation's Maintenance Department provides services to the company's two operating divisions: the Consure Division and the Commercial Division. The variable costs of the Maintenance Department are budgeted based on the number of units produced by the operating departments. The fixed costs of the Maintenance Department are determined by the number of units produced by the operating departments during the peak period. The two operating departments together produced 60.000 How much actual Maintenance Department cost should NOT be allocated to the operating divisions at the end of the year? (Choose the closest number) $0 $1,030 $12,630 $11,600 None of the aboveExplanation / Answer
Budgeted variable cost = $4.5 per unit
Production = 60000 units
Budgeted variable cost = $4.5 * 60000 = $270000
Budgeted fixed cost = $708000
Total budgeted cost = $978000
Actual variable cost = 281600
Actual fixed cost = $709030
Total Actual cost = $990630
Actual Maintenance department cost should Not be allocated to the operating divisions at end of the year = Total actual cost - total budgeted cost
= $990630 - $978000
= $12,630
ANSWER = C) $12630