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: Variable costs for lubricants Fixed costs for salaries and other *Budgeted at $20 per machine-hour. Data for the Forming and Assembly Departments follow: Forming Department Assembly Department Total Budget $ 296,000* $ 218,000 Percentage of Peak- Period Capacity Required 66% 34% 100% Machine-Hours Budget 9,600 5,200 14,800 Actual $ 378,800 $ 234,800 Actual 11,600 4,200 15,800 The level of fixed costs in the Maintenance Department is determined by peak-perlod 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?
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: Variable costs for lubricants Fixed costs for salaries and other *Budgeted at $20 per machine-hour. Data for the Forming and Assembly Departments follow: Forming Department Assembly Department Total Budget $ 296,000* $ 218,000 Percentage of Peak- Period Capacity Required 66% 34% 100% Machine-Hours Budget 9,600 5,200 14,800 Actual $ 378,800 $ 234,800 Actual 11,600 4,200 15,800 The level of fixed costs in the Maintenance Department is determined by peak-perlod 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?
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Question
Oo.72.
Subject :- Account
Transcribed Image Text: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:
Variable costs for lubricants
Fixed costs for salaries and other
"Budgeted at $20 per machine-hour.
Data for the Forming and Assembly Departments follow:
Forming Department
Assembly Department
Total
Budget
$ 296,000*
$ 218,000
Percentage
of Peak-
Period
Capacity
Required
66%
34%
100%
Machine-Hours
Budget
9,600
5,200
14,800
Actual
$ 378,800
$ 234,800
Actual
11,600
4,200
15,800
The level of fixed costs in the Maintenance Department is determined by peak-period requirements.
Required:
1. How much Maintenance Departme 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?
Answer is complete but not entirely correct.
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