Asked by Haktan Öztürkçü on Jul 28, 2024
Verified
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.How much Housekeeping Department cost should be charged to Rehabilitation at the end of September?
A) $19,840
B) $9,920
C) $9,600
D) $7,440
Housekeeping Department
A division within a business, often within the hospitality industry, responsible for maintaining cleanliness, orderliness, and standards of hygiene.
Operating Departments
Sections or units within an organization directly involved in its core business activities, responsible for producing its goods or services.
Labor-hours
The total number of hours worked by all employees during a specific period, used as a measure in various calculations and operational decisions.
- Determine the expense associated with service departments that is to be allocated to distinct operating divisions for evaluating their performance.
Verified Answer
From the table, we see that Rehabilitation used 4,800 labor-hours.
To calculate the Housekeeping Department cost to be charged to Rehabilitation:
Actual Housekeeping costs / Actual total labor-hours * Rehabilitation labor-hours
$29,760 / 24,000 * 4,800 = $9,600
Therefore, the Housekeeping Department cost to be charged to Rehabilitation at the end of September is $9,600.
Learning Objectives
- Determine the expense associated with service departments that is to be allocated to distinct operating divisions for evaluating their performance.
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