A custodial support department budgets its costs at $42,960 per month plus $12 p

Question

A custodial support department budgets its costs at $42,960 per month plus $12 per hour. For November, the custodial support department provided the following estimated and actual hours to three operating departments Estimated Hours Actual Hours Spent Cleaning Spent Cleaning Department A Department B Department C Total 1,590 1,290 1,910 4,790 1,560 1,650 1,750 4,960 ? (a) Assume that the single-rate method is used, and calculate the cost allocation to each department for housekeeping services if estimated hours are used. (Round allocation rate to 2 decimal places, e.g. 15.25 and answers to 0 decimal places, e.g. 125.) Allocation of housekeeping costs Department A Department B Department C

Explanation / Answer

Fixed costs = 42,960

Variable cost = 12 per hour

Allocation Rate of Fixed cost on the basis of estimated hours

= Total Fixed Costs/Total Estimated Hours

=42960/4790

=8.97 per hour

Hence, Allocation of Housekeeping Costs (On the basis of actual hours)

Department A

(8.97+12)*1560=32,713

Department B

(8.97+12)*1650=34.601

Department C

(8.97+12)*1750=36,698

Department A

(8.97+12)*1560=32,713

Department B

(8.97+12)*1650=34.601

Department C

(8.97+12)*1750=36,698

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