Tasman Products, Limited, 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: Budget Variable costs for lubricants Actual $ 448,480 $ 349,600* Fixed costs for salaries and other $ 196,000 $ 210,600 *Budgeted at $23 per machine-hour. Data for the Forming and Assembly Departments follow: Percentage of Peak- Period Capacity Required 67% Forming Department 10,200 12,200 Assembly Department 33% 5,000 4,000 Total 100% 15,200 16,200 The level of fixed costs in the Maintenance Department is determined by peak-period requirements. Required: 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? Machine-Hours Budget Actual

Tasman Products, Limited, 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: Budget Variable costs for lubricants Actual $ 448,480 $ 349,600* Fixed costs for salaries and other $ 196,000 $ 210,600 *Budgeted at $23 per machine-hour. Data for the Forming and Assembly Departments follow: Percentage of Peak- Period Capacity Required 67% Forming Department 10,200 12,200 Assembly Department 33% 5,000 4,000 Total 100% 15,200 16,200 The level of fixed costs in the Maintenance Department is determined by peak-period requirements. Required: 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? Machine-Hours Budget Actual

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Description: Tasman Products, Limited, of Australia has a Maintenance Department that services the equipment in the company's FormingDepartment and Assembly Department. The cost of this servicing is charged to the operating departments on the basis of machine-ho

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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