Robertson Company Has Two Production Departments Called Assembly and Finishing

question 60

Multiple Choice

Robertson Company has two production departments called Assembly and Finishing.The maintenance department serves both production departments.Maintenance costs are allocated based on labor hours.Budgeted fixed costs for the maintenance department are $40,000.Budgeted variable costs for the maintenance department are $4.00 per labor hour.Other relevant data follow:
$\begin{array}{ll}&\text { Assembly }&\text { Finishing }\\\text { Capacity available }&\text { 18,000 labor hours } & 12,000 \text { labor hour: } \\\text { Capacity used }&\text { 15,000 labor hours } & 9,000 \text { labor hours }\end{array}$
Actual maintenance department costs:
$\begin{array}{ll}\text { Fixed } & \$ 36,000 \\\text { Variable } & \$ 100,000\end{array}$
The amount of fixed maintenance department costs allocated to the Finishing Department should be ________.

• A) $11,250
• B) $14,400
• C) $15,000
• D) $16,000

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Definitions:

Job-Order Costing

A cost accounting system that assigns costs to specific production batches or jobs, useful for customized or unique products.

Process Costing

An accounting methodology used to allocate costs to units of production in continuous, homogeneous operations, typical in industries like chemicals or food production.

Process Costing System

An accounting method used to apply costs to similar products or services that are mass-produced in a continuous fashion.

Job Costing System

A method of assigning production costs to individual units or projects, tracking expenses by job.