Question

Jose Ruiz manages a car dealer’s service department. His department is organized as a cost center. Costs for a recent quarter are shown below. Cost of parts $ 22,400 Mechanics’ wages 14,300 Manager’s salary 8,000 Building depreciation (allocated) 4,500 Shop supplies 1,200 Utilities (allocated) 800 Administrative costs (allocated) 2,200 Calculate the total costs that would appear on a responsibility accounting report for the service department.

Answer 1

• Responsibility Accounting Report excludes Unavoidable Fixed Costs that are allocated to the service departments.
• As such, the total costs that would appear on a responsibility accounting report for the service department are:

Cost of parts	$                         22,400.00
Mechanics Wages	$                         14,300.00
Manager's Salary	$                           8,000.00
Shop Supplies	$                           1,200.00
Total cost that would appear	$                         45,900.00

• Answer = $ 45,900