Answer:
1. Calculate a variable rate for the Maintenance Department. Round your answer to the nearest cent. $ per maintenance hour Calculate the allocated fixed cost for each using department based on its budgeted peak month usage in maintenance hours.
variable rate = $1.30 per maintenance hour
Department                            Peak Number              Allocated  
                                                of hours                        Fixed cost  
Assembly                          (210/2,100) x $65,400          $6,540
Fabrication                     (1,050/2,100) x $65,400        $32,700
<u>Packaging                        (840/2,100) x $65,400         $26,160</u>
Total                                        2,100/2,100                   $65,400
2. Use the two rates to assign the costs of the Maintenance Department to the user departments based on actual usage. Calculate the total amount charged for maintenance for the year.
Department             Fixed costs         Variable cost                  Total              
Assembly                      $6,540     3,500 x $1.30 = $4,550      $11,090
Fabricating                  $32,700     7,000 x $1.30 = $9,100      $41,800
<u>Packaging                   $26,160    10,000 x $1.30 = $13,000    $39,160</u>
Total                           $65,400            $26,650                      $92,050
3. What if the Assembly Department used 3,550 maintenance hours in the year? How much would have been charged out to the three departments?
Department             Fixed costs         Variable cost                  Total              
Assembly                      $6,540     3,550 x $1.30 = $4,615        $11,155
Fabricating                  $32,700     7,000 x $1.30 = $9,100      $41,800
<u>Packaging                   $26,160    10,000 x $1.30 = $13,000    $39,160</u>
Total                           $65,400              $26,715                       $92,115