The Cost of Operating the Quality Control Department of Strongsville

question 113

Essay

The cost of operating the Quality Control Department of Strongsville Manufacturing includes $850,000 of fixed costs and $550,000 of variable costs.The department normally budgets 20,000 inspection hours a year.Two departments, Fabrication and Assembly, receive quality control checks.Fabrication is budgeted at 1,000 hours a month, while Assembly is budgeted the remainder.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 single rate is used based on budgeted hours?

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Definitions:

Revenue

The total amount of money received by a company from its sales of goods or services, before any expenses are subtracted.

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity, allowing for more accurate budgeting and analysis.

Employee Salaries And Wages

Compensation paid to employees for their services, including both fixed salaries and hourly wages.

Planning Budget

A planning budget is a financial plan that estimates the revenue and expenses for a specific period, typically used as a guide for spending and saving.