Tasman Products has a Maintenance Department that services equipment in the company's Forming Department and Assembly Department. The cost of this servicing is charged to the operating departments based on machine-hours. Data for the Maintenance Department follow: Variable costs for lubricants Fixed costs for salaries and other Budget $ 286,000* $ 214,000 *Budgeted at $20 per machine-hour. Data for the Forming and Assembly Departments follow: Percentage of Peak- Actual $ 365,800 $ 230,400 Machine-Hours Period Capacity Required Budget Actual Forming Department Assembly Department Total 71% 9,700 11,700 29% 100% 4,600 3,600 14,300 15,300 The amount of fixed costs in the Maintenance Department is determined by peak-period requirements. Required: 1. How much Maintenance Department cost should be charged to the Forming Department and to the Assembly Department? 2. How much, if any, of the Maintenance Department's actual costs should be treated as a spending variance and not charged to the Forming and Assembly departments?
Tasman Products has a Maintenance Department that services equipment in the company's Forming Department and Assembly Department. The cost of this servicing is charged to the operating departments based on machine-hours. Data for the Maintenance Department follow: Variable costs for lubricants Fixed costs for salaries and other Budget $ 286,000* $ 214,000 *Budgeted at $20 per machine-hour. Data for the Forming and Assembly Departments follow: Percentage of Peak- Actual $ 365,800 $ 230,400 Machine-Hours Period Capacity Required Budget Actual Forming Department Assembly Department Total 71% 9,700 11,700 29% 100% 4,600 3,600 14,300 15,300 The amount of fixed costs in the Maintenance Department is determined by peak-period requirements. Required: 1. How much Maintenance Department cost should be charged to the Forming Department and to the Assembly Department? 2. How much, if any, of the Maintenance Department's actual costs should be treated as a spending variance and not charged to the Forming and Assembly departments?
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter7: Allocating Costs Of Support Departments And Joint Products
Section: Chapter Questions
Problem 28E: Minor Co. has a job order cost system and applies overhead based on departmental rates. Service...
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