(Appendix 11B) Lakeside Nursing Home Has Two Operating Departments, Custodial

question 18

Multiple Choice

(Appendix 11B) 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.
-For performance evaluation purposes,how much of the actual Housekeeping Department costs for September should not be charged to the operating departments?

• A) $960
• B) $5,760
• C) $0
• D) $1,240

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Definitions:

Income Elasticity Coefficient

A measure indicating how much the quantity demanded of a good responds to change in consumer income.

Recessions

Periods of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in successive quarters.

Income Elasticity

A measure of how much the demand for a product or service changes in response to changes in consumer income.

Inferior Good

A type of good for which demand decreases as the income of individuals increases, opposite to normal goods.