Problem 2 - Single-rate vs Dual-rate (15 marks)

The cost of operating the quality control department of Assembly Required Manufacturing includes $608,000 of fixed costs and $400,000 of variable costs. The department normally budgets 21,000 inspection hours a year. Two departments receive quality control checks, fabrication and assembly. Fabrication is budgeted at 12,000 hours a year, while assembly is budgeted the remainder.

Required

In July, fabrication used 1,000 inspection hours and assembly used 800 hours. How much did each department receive in quality control costs assuming a single-rate is used based on budgeted hours?

In August, fabrication used 1,200 inspection hours and assembly used 900 hours. How much did each department receive in quality control costs assuming a dual-rate is used with budgeted usage for fixed costs and actual usage for variable costs?