Question

The medical services department of Fischer Company budgeted $25 of variable medical expenses per employee for May, based on 2,000 employees in operating departments. During May an average of 1,980 employees were employed in operating departments. Actual variable medical expenses totaled $50,700 for the month. How much variable medical expenses should be charged to operating departments at the end of May for performance evaluation purposes?

a. $50,700
b. $49,500
c. $50,000
d. $51,212

Answer 1

The variable medical expenses that should be charged to operating departments at the end of May for performance evaluation purposes is b. $49,500.

Step-by-step explanation:

To determine the variable medical expenses that should be charged to operating departments at the end of May, we need to calculate the budgeted variable medical expenses per employee and multiply it by the actual number of employees in the operating departments.

Step 1: Calculate the budgeted variable medical expenses per employee: $25

Step 2: Calculate the variable medical expenses based on the actual number of employees: $25 x 1,980 = $49,500

Hence, the variable medical expenses that should be charged to operating departments at the end of May for performance evaluation purposes is $49,500.