Warehouse Services Is a Service Department in the Werner Company

question 36

Essay

Warehouse Services is a service department in the Werner Company, providing storage service to three operating departments. The company charges the costs of this department to operating departments on the basis of cubic feet occupied.
Last year, Warehouse Services budgeted variable storage cost of $0.15 per cubic foot occupied. The budgeted total fixed cost was $120,000, and was determined by the long-term storage needs of the operating departments. Actual storage space occupied during the year, along with long-term storage needs of operating departments, is given below: Actual variable storage costs amounted to $0.16 per cubic foot occupied. Actual fixed storage costs were $123,000.
Required:
a. Compute the amount of variable storage cost that should be charged to each operating department at the end of the year for performance evaluation purposes.
b. Compute the amount of fixed storage cost that should be charged to each operating department at the end of the year for performance evaluation purposes.

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