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Calculating and Using Dual Charging Rates The expected costs for the Maintenance Department of Stazler, Inc.,...

Calculating and Using Dual Charging Rates

The expected costs for the Maintenance Department of Stazler, Inc., for the coming year include:

Fixed costs (salaries, tools): $78,050 per year
Variable costs (supplies): $1.3 per maintenance hour

The Assembly and Packaging departments expect to use maintenance hours relatively evenly throughout the year. The Fabricating Department typically uses more maintenance hours in the month of November. Estimated usage in hours for the year and for the peak month is as follows:

Yearly
hours		 Monthly
Peak Hours
Assembly Department 4,900      210         
Fabricating Department 6,300      1,260         
Packaging Department 11,100      630         
    Total maintenance hours 22,300      2,100         

Actual usage for the year by:

Assembly Department 3,250
Fabricating Department 6,400
Packaging Department 10,300
    Total maintenance hours 19,950

Required:

1. Calculate a variable rate for the Maintenance Department. Round your answer to the nearest cent.
$ per maintenance hour

Calculate the allocated fixed cost for each using department based on its budgeted peak month usage in maintenance hours. Round your answers to the nearest dollar.

Department Peak Number of Hours Allocated Fixed Cost
Assembly $
Fabricating   
Packaging   
Total $

2. Use the two rates to assign the costs of the Maintenance Department to the user departments based on actual usage. Calculate the total amount charged for maintenance for the year. Round your answers to the nearest dollar.

Assembly $
Fabricating   
Packaging   
Total $

3. What if the Assembly Department used 3,300 maintenance hours in the year? How much would have been charged out to the three departments? Round your answers to the nearest dollar.

Assembly $
Fabricating
Packaging
Total $

Solutions

Expert Solution

Ans : -

Variable Rate =$1.30 per Maintenance Hour

1. Allocation of Fixed Cost

Department Peak Hours % of Total Peak Hours Budgeted Fixed Cost Allocated Fixed Cost
Assembly 210 (210/2,100*100)=10% 78,050 $7,805
Fabricating 1,260 (1,260/2,100*100)=60% 78,050 $46,830
Packaging 630 (630/2,100*100)=30% 78,050 $23,415
Total 2,100 $78,050

2.

Department Actual Hours Variable rate Variable Cost Allocated Fixed Cost Total
Assembly 3,250 1.30 $4,225 $7,805 $12,030
Fabricating 6,400 1.30 $8,320 $46,830 $55,150
Packaging 10,300 1.30 $13,390 $23,415 $36,805
Total 19,950 $25,935 $103,985

3. If Assembly Department uses 3,300 maintenance hours in the year

Department Actual Hours Variable rate Variable Cost Allocated Fixed Cost Total
Assembly 3,300 1.30 $4,290 $7,805 $12,095
Fabricating 6,400 1.30 $8,320 $46,830 $55,150
Packaging 10,300 1.30 $13,390 $23,415 $36,805
Total 20,000 $26,000 $104,050

ekkarill92 answered 1 year ago
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