James Company has two production departments called Mixing and Finishing. The ma

Question

James Company has two production departments called Mixing and Finishing.  The maintenance department serves both production departments. budgeted fixed costs for the maintenance department are $30,000. Budgeted variable costs for the maintenance department are $5.00 per labor hour. Acutual maintenance department costs are $36,000 fixed and $100,000 variable. Other relevant data follow:

                             Mixing       ,       Finishing

              _______________________________

Capacity available  20,000 labor hours,         15,000 labors hours

Capacity used           15,000 labor hours,       9,000 Labros hours

The amount of avariable maintenance department costs allocated to the Mixing department shoud be ______________.?

Explanation / Answer

$5 * 15,000 hours = $ 75,000.

The amount of avariable maintenance department costs allocated to the Mixing department shoud be $75,000.

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