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): $78,810 per year

Variable costs (supplies): $1.35 per maintenance hour

Estimated usage by:

Assembly Department 4,900

Fabricating Department 6,100

Packaging Department 11,200

Total maintenance hours 22,200

Actual usage by:Assembly Department3,750

Fabricating Department 6,200

Packaging Department 10,400

Total maintenance hours 20,350

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 ifthe Assembly Department used 3,800 maintenance hours in the year? How much would have been charged out to the three departments?

Assembly Department charge$Fabricating Department chargePackaging Department chargeTotal amount charged$