10 Check my work Problem 11B-5 Service Department Charges [LO11-6] Tasman Produc

Question

10 Check my work 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. Book Print ferences Data for the Maintenance Department follow: Budget Actual Variable costs for lubricants $296,000 $378,800 Fixed costs for salaries and other $284,008 $219,488 Budgeted at $20 per machine-hour. Data for the Forming and Assembly Departments follow Percentage of Peak-Period Machine-Hours Capacity Renuired Rudoet Actual

Explanation / Answer

1) Forming Assembly MHs 12300 3500 Variable Maintenance cost per MH $20 $20 VMO charged $246,000 $70,000 2) Spending variance = Actual units * Budgeted rate - Actual variable manuf overhead   Forming = 12300 * 20 - (378800 * 70%) = 246000 - 265160 = $19160 U Assembly = 3500 * 20 - (378800 * 30%) = 70000 - 113640 = $43640 U

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