Layton Company Operates a Cafeteria for the Benefit of Its

question 51

Essay

Layton Company operates a cafeteria for the benefit of its employees.The company subsidizes the cafeteria heavily by allowing employees to purchase meals at greatly reduced prices.Budgeted and actual costs in the cafeteria for the year just ended are as follows: $$\begin{array} { | l | c | c | } \hline & \text { Budgeted } & \text { Actual } \\\hline \text { Variable costs } & \$ 500,000 & \$ 436,000 \\\hline \text { Fixed costs } & \$ 340,000 & \$ 352,000 \\\hline\end{array}$$
Costs of the cafeteria are charged to producing departments on the basis of the number of employees in these departments.Fixed costs are charged on the basis of the peak-period number of employees.Data on employees in the company's producing departments follows: $$\begin{array} { | l | c | c | c | } \hline & \text { Machining } & \text { Assembly } & \text { Total } \\\hline \begin{array} { l } \text { Budgeted number of } \\\text { employees }\end{array} & 300 & 500 & 800 \\\hline \text { Actual number of employees } & 200 & 400 & 600 \\\hline \text { Peak-period number of } & 400 & 600 & 1,000 \\\text { employees }\\\hline \end{array}$$
Required:
a.Compute the dollar amount of variable and fixed costs that should be charged to each of the producing departments at the end of the year for purposes of evaluating performance.b.Identify the amount,if any,of actual costs that should not be charged to the operating departments.

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Definitions:

Conversion Rate

A metric used to measure the percentage of potential customers who take a specific desired action, often used in digital marketing.

Cost Per Equivalent Units

A method used in process costing that calculates the cost assigned to units produced during a period, considering partially completed units as fractions of whole units.

Weighted Average Method

An inventory valuation method that calculates the cost of goods sold and ending inventory balance using a weighted average of the costs of all items available for sale during the period.

FIFO Costing

An inventory valuation method that assumes that the first items placed in inventory are the first ones sold, standing for First In, First Out.