The Fixed Costs of Operating the Maintenance Facility of Indian

question 32

Essay

The fixed costs of operating the maintenance facility of Indian River Hospital are $4,500,000 annually. Variable costs are incurred at the rate of $30 per maintenance hour. The facility averages 40,000 maintenance hours a year. Budgeted and actual hours for 2020 are as follows:
$$\begin{array} { l c c } & \text { Budgeted } & \\& \text { hours } & \text { Actual hours } \\\text { Building and prounds } & 10,000 & 12,000 \\\text { Operating and emergency } & 8,000 & 8,000 \\\text { Patient care } & 21,000 & 22,000 \\\text { Adrninistration } & \underline{1,000} & \underline{1,200} \\\text{Total}& \underline{40,000} & \underline{43,200} \\\end{array}$$
Assume that budgeted maintenance hours are used to calculate the allocation rates.
Required:
a. If a single-rate cost allocation method is used, what amount of maintenance cost will be budgeted for each department?
b. If a single-rate cost allocation method is used, what amount of maintenance cost will be allocated to each department based on actual usage?
c. If a dual-rate cost allocation method is used, what amount of maintenance cost will be budgeted for each department?
d. If a dual-rate cost allocation method is used, what amount of maintenance cost will be allocated to each department based on actual usage?

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