The Cost of Operating the Quality Control Department of Ames

question 84

Essay

The cost of operating the quality control department of Ames 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 1,000 hours a month, while assembly is budgeted the remainder.
Required:
a. 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?
b. 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?

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Definitions:

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The total information and skills that an individual has gathered over a period of time from experiences, education, and training.

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A measure of how much of the variation in a trait among a population can be attributed to genetic differences.

Genetic Variation

Differences in the DNA sequence among individuals, which contribute to the uniqueness of each person's physical and behavioral characteristics.

Intelligence Test

A standardised assessment used to measure a person's intellectual capabilities and potential.