Cornerstone Exercise 7.1 (Algorithmic)
Calculating and Using a Single Charging Rate
The expected costs for the Maintenance Department of Stazler, Inc., for the coming year include:
Fixed costs (salaries, tools): $71,680 per year
Variable costs (supplies): $1.30 per maintenance hour
Estimated usage by:
Assembly Department 5,000
Fabricating Department 6,000
Packaging Department 11,400
Total maintenance hours 22,400
Actual usage by:
Assembly Department 3,500
Fabricating Department 6,100
Packaging Department 10,600
Total maintenance hours 20,200
Required:
1. Calculate a single charging rate for the Maintenance Department. Round your answer to the nearest cent.
per maintenance hour
2. Use this rate 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.
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?
Assembly Department charge
Fabricating Department charge
Packaging Department charge
Total amount charged