The fixed costs of operating the Spartan Corp. are $4,800,000 annually. Variable costs are incurred at the
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Question:
- The fixed costs of operating the Spartan Corp. are $4,800,000 annually. Variable costs are incurred at the rate of $25 per maintenance-hour. On average, the company incurs 38,000 maintenance-hours per year. Budgeted and actual hours per user for 2019 are as follows:
Budgeted hours
Actual hours
Building and grounds
10,000
9,800
Administration
2,500
1,600
Customer Service
18,000
22,500
IT support
7,500
7,800
Total
38,000
41,700
Assume that budgeted maintenance-hours are used to calculate the allocation rates.
- Using a single-rate allocation and budgeted usage, how much will each department be allocated?
- Using a dual-rate allocation with fixed costs allocated according to budgeted hours and variable costs allocated to actual hours, how much overhead will each department be allocated?
Related Book For
Financial Management for Public Health and Not for Profit Organizations
ISBN: 978-0132805667
4th edition
Authors: Steven A. Finkler, Thad Calabrese
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