Question

Problem 11B-5 Service Department Charges [LO11-6] Tasman Products, Ltd., of Australia has a Maintenance Department that services the equipment in the company's Forming Department and Assembly Department. The cost of this servicing is charged to the operating departments on the basis of machine-hours. Cost and other data relating to the Maintenance Department and to the other two departments for the most recent year are presented below. Data for the Maintenance Department follow Variable costs for lubricants Fixed costs for salaries and other Budget Actual $327,808* $420, 140 $209,000 $224,900 "Budgeted at $22 per machine-hour. Data for the Forming and Assembly Departments follow Machine-Hours Percentage of Peak-Period Capacity Required 68% Forming Department Assembly Department Total 32% 100% Budget 10,088 4,900 14,900 Actual 12,000 3,900 15,900

Answer 1

solution computation of maintenance department cost should be charged to the farming department and to the Assembly dupantment Particulars forming Department Assembly department variable cast's charges machine hours x cost per machine his 12.000 a 3 900 x 29 264,000 85,800 Filed cost charges budgeted cost % of Peak Period capacity 2,09.000 x 68% 2,09.000 x32%. 1, 42,120 66,880 4.06.180 1.59.680 Total charges

variable cost ② spending variance Particulans fined Total cost Actual costs incomed $4,20.140 $ 924,900 6,45,000 Total charged to Departments ③ $3,49,800 $2,09,000 5,58,800 spending variance (A-B) I 70,340 $ 15,900 86.900 there fore 886,240 1 unchar gece costs are incored by the maintainance department