The Fixed Costs of Operating the Maintenance Facility of General

question 156

Essay

The fixed costs of operating the maintenance facility of General 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 per user for the year are as follows:
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 budgeted usage for fixed operating costs and actual usage for variable operating costs?

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Definitions:

Rank Ordering

The process of organizing items or individuals based on their performance, preference, or priority in a hierarchical list.

Base Compensation

The initial rate of pay provided to an employee, not including additional benefits, bonuses, or incentives.

Fringe Benefits Programs

Packages offered by employers outside of regular salaries, including health insurance, retirement plans, and other perks.

Organization

A group of individuals working together in a structured and coordinated fashion to achieve a set of goals.