Korvanis Corporation operates a Medical Services Department for its employees. Charges to the companys operating departments for the variable costs of the Medical Services Department are based on the actual number of employees in each department. Charges for the fixed costs of the Medical Services Department are based on the long-run average number of employees in each operating department.

Variable Medical Services Department costs are budgeted at $56 per employee. Fixed Medical Services Department costs are budgeted at $604,300 per year. Actual Medical Services Department costs for the most recent year were $106,600 for variable costs and $610,000 for fixed costs. Data concerning employees in the three operating departments follow:

	Cutting	Milling	Assembly
Budgeted number of employees	603	300	903
Actual number of employees for the most recent year	503	400	803
Long-run average number of employees	720	480	1,200

Required:

1. Determine the Medical Services Department charges for the year to each of the operating departmentsCutting, Milling, and Assembly.

2. How much, if any, of the actual Medical Services Department costs for the year should be treated as a spending variance and not charged to the operating departments?