Gabritz, Incorporated Has a Maintenance Department That Provides Services to the Company's

question 243

Essay

Gabritz, Incorporated has a maintenance department that provides services to the company's two operating departments. The variable costs of the maintenance department are charged on the basis of the number of maintenance hours logged in each department. Last year, budgeted variable maintenance costs were $7.50 per maintenance hour and actual variable maintenance costs were $7.80 per maintenance hour.The budgeted and actual maintenance hours for each operating department for last year appear below:
Required: a. Compute the amount of variable maintenance department cost that should have been charged to each operating department at the end of the year for performance evaluation purposes.b. Compute the amount of actual variable maintenance department cost that should NOT have been charged to the operating departments at the end of the year for performance evaluation purposes.

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Definitions:

Equity Method

An accounting technique used when a company invests in a firm and has significant influence over it, recognizing its share of profit or loss in its own financial statements.

Significant Influence

Refers to the power to participate in the financial and operating policy decisions of an investee but is not control over those policies.

Investee's Board

The group of individuals elected by shareholders to oversee the management and make strategic decisions for a company in which investment has been made.

Computing Services

The provision of computational resources, such as servers, storage, databases, networking, software, analytics, and intelligence, over the Internet.