ornerstone 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): $68,670 per year

Variable costs (supplies): $1.45 per maintenance hour

Estimated usage by:

Assembly Department 4,800

Fabricating Department 6,500

Packaging Department 10,500

Total maintenance hours 21,800

Actual usage by:

Assembly Department 3,500

Fabricating Department 6,600

Packaging Department 9,700

Total maintenance hours 19,800

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 $

3,500

Fabricating Department charge

6,600

Packaging Department charge

Total amount charged $

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