3 Tasman Products, Ltd., of Australia has a Maintenance Department that services
ID: 2547517 • Letter: 3
Question
3 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 10 points Data for the Maintenance Department follow: Budget Actual $390,000* $501,000 Variable costs for lubricants Fixed costs for salaries 218,000 $234,800 and other eBook Print Budgeted at $25 per machine-houn Data for the Forming and Assembly Departments follow: Reference Percentage of Machine-Hours Peak-Period Capacity Forming Department Assembly Department Total Required Budget Actual 10,300 12,300 5,300 4,300 15,600 16,600 70% 30% 100% The level of fixed costs in the Maintenance Department is determined by peak-period requirements. Required Management would like data to assist in comparing actual performance to planned performance in the Maintenance Department and in the other departments. 1. How much Maintenance Department cost should be charged to the Forming Department and to the Assembly Department? 2. How much, if any, of the actual Maintenance Department costs for the year should be treated as a spending variance and not charged to the Forming and Assembly departments? Complete this question by entering your answers in the tabs below. Required Required How much Maintenance Department cost should be charged to the Forming Department 2 and to the Assembly Department? ing Assembly Department Department Total cost charged Required1 Required 2Explanation / Answer
1. Beginning-of-year allocations of variable costs are computed by multiplying the budgeted rate by the budgeted level of activity. Fixed costs are allocated in lump-sum amounts based on the peak-period needs of the using departments. The computations are:
Forming Department
Assembly Department
Total
Variable costs:
$25 per machine-hour × 10,300 machine-hours......
$ 257,500
$25 per machine-hour × 5,300 machine-hours........
$132500
$ 390,000
Fixed costs:
70% × $218,000................
152,600
30% × $218,000................
65,400
218,000
Total cost allocated................
$410,100
$197,900
$608,000
2. a. End-of-year allocations of variable costs are computed by multiplying the budgeted rate by the actual level of activity. Beginning-of-year allocations of variable costs are computed by multiplying the budgeted rate by the budgeted level of activity. Fixed costs are allocated in lump-sum amounts based on the peak-period needs of the using departments. The computations are:
Forming Department
Assembly Department
Total
Variable costs:
$25 per machine-hour × 12,300 machine-hours......
$ 307,500
$25 per machine-hour × 4,300 machine-hours........
$107,500
$415,000
Fixed costs:
70% × $218,000................
152,600
30% × $218,000................
65,400
218,000
Total cost allocated................
$460,100
$172,900
$633,000
b. Any difference between the
1. Beginning-of-year allocations of variable costs are computed by multiplying the budgeted rate by the budgeted level of activity. Fixed costs are allocated in lump-sum amounts based on the peak-period needs of the using departments. The computations are:
Forming Department
Assembly Department
Total
Variable costs:
$25 per machine-hour × 10,300 machine-hours......
$ 257,500
$25 per machine-hour × 5,300 machine-hours........
$132500
$ 390,000
Fixed costs:
70% × $218,000................
152,600
30% × $218,000................
65,400
218,000
Total cost allocated................
$410,100
$197,900
$608,000
2. a. End-of-year allocations of variable costs are computed by multiplying the budgeted rate by the actual level of activity. Beginning-of-year allocations of variable costs are computed by multiplying the budgeted rate by the budgeted level of activity. Fixed costs are allocated in lump-sum amounts based on the peak-period needs of the using departments. The computations are:
Forming Department
Assembly Department
Total
Variable costs:
$25 per machine-hour × 12,300 machine-hours......
$ 307,500
$25 per machine-hour × 4,300 machine-hours........
$107,500
$415,000
Fixed costs:
70% × $218,000................
152,600
30% × $218,000................
65,400
218,000
Total cost allocated................
$460,100
$172,900
$633,000
b. Any difference between the
1. Beginning-of-year allocations of variable costs are computed by multiplying the budgeted rate by the budgeted level of activity. Fixed costs are allocated in lump-sum amounts based on the peak-period needs of the using departments. The computations are:
Forming Department
Assembly Department
Total
Variable costs:
$25 per machine-hour × 10,300 machine-hours......
$ 257,500
$25 per machine-hour × 5,300 machine-hours........
$132500
$ 390,000
Fixed costs:
70% × $218,000................
152,600
30% × $218,000................
65,400
218,000
Total cost allocated................
$410,100
$197,900
$608,000
2. a. End-of-year allocations of variable costs are computed by multiplying the budgeted rate by the actual level of activity. Beginning-of-year allocations of variable costs are computed by multiplying the budgeted rate by the budgeted level of activity. Fixed costs are allocated in lump-sum amounts based on the peak-period needs of the using departments. The computations are:
Forming Department
Assembly Department
Total
Variable costs:
$25 per machine-hour × 12,300 machine-hours......
$ 307,500
$25 per machine-hour × 4,300 machine-hours........
$107,500
$415,000
Fixed costs:
70% × $218,000................
152,600
30% × $218,000................
65,400
218,000
Total cost allocated................
$460,100
$172,900
$633,000
b. Any difference between the
1. Beginning-of-year allocations of variable costs are computed by multiplying the budgeted rate by the budgeted level of activity. Fixed costs are allocated in lump-sum amounts based on the peak-period needs of the using departments. The computations are:
Forming Department
Assembly Department
Total
Variable costs:
$25 per machine-hour × 10,300 machine-hours......
$ 257,500
$25 per machine-hour × 5,300 machine-hours........
$132500
$ 390,000
Fixed costs:
70% × $218,000................
152,600
30% × $218,000................
65,400
218,000
Total cost allocated................
$410,100
$197,900
$608,000
2. a. End-of-year allocations of variable costs are computed by multiplying the budgeted rate by the actual level of activity. Beginning-of-year allocations of variable costs are computed by multiplying the budgeted rate by the budgeted level of activity. Fixed costs are allocated in lump-sum amounts based on the peak-period needs of the using departments. The computations are:
Forming Department
Assembly Department
Total
Variable costs:
$25 per machine-hour × 12,300 machine-hours......
$ 307,500
$25 per machine-hour × 4,300 machine-hours........
$107,500
$415,000
Fixed costs:
70% × $218,000................
152,600
30% × $218,000................
65,400
218,000
Total cost allocated................
$460,100
$172,900
$633,000
b. Any difference between the
1. Beginning-of-year allocations of variable costs are computed by multiplying the budgeted rate by the budgeted level of activity. Fixed costs are allocated in lump-sum amounts based on the peak-period needs of the using departments. The computations are:
Forming Department
Assembly Department
Total
Variable costs:
$25 per machine-hour × 10,300 machine-hours......
$ 257,500
$25 per machine-hour × 5,300 machine-hours........
$132500
$ 390,000
Fixed costs:
70% × $218,000................
152,600
30% × $218,000................
65,400
218,000
Total cost allocated................
$410,100
$197,900
$608,000
2. a. End-of-year allocations of variable costs are computed by multiplying the budgeted rate by the actual level of activity. Beginning-of-year allocations of variable costs are computed by multiplying the budgeted rate by the budgeted level of activity. Fixed costs are allocated in lump-sum amounts based on the peak-period needs of the using departments. The computations are:
Forming Department
Assembly Department
Total
Variable costs:
$25 per machine-hour × 12,300 machine-hours......
$ 307,500
$25 per machine-hour × 4,300 machine-hours........
$107,500
$415,000
Fixed costs:
70% × $218,000................
152,600
30% × $218,000................
65,400
218,000
Total cost allocated................
$460,100
$172,900
$633,000
b. Any difference between the budgeted and actual variable cost per machine-hour or between the budgeted and actual total fixed cost would not be allocated to the other departments. The amount not allocated would be:
Variable Cost
Fixed Cost
Total
Actual cost incurred during the year
$501,000
$234,800
$735,800
Cost allocated (above)...................
415,000
218,000
633,000
Cost not allocated (spending
variance)...................................
$ 86,000
$ 16,800
$ 102,800
The costs not allocated are spending variances of the Maintenance Department and are the responsibility of the Maintenance Department’s manager.
Forming Department
Assembly Department
Total
Variable costs:
$25 per machine-hour × 10,300 machine-hours......
$ 257,500
$25 per machine-hour × 5,300 machine-hours........
$132500
$ 390,000
Fixed costs:
70% × $218,000................
152,600
30% × $218,000................
65,400
218,000
Total cost allocated................
$410,100
$197,900
$608,000
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.