The Fixed Costs of Operating the Maintenance Facility of General

question 35

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 2017 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 actual usage? Based on budgeted usage for fixed operating costs and actual usage for variable operating costs?

---

Definitions:

Information Revolution

The rapid and extensive changes in society due to the vast availability of information, primarily through information technology and the internet.

Microchip

A small semiconductor device containing integrated circuits used for processing, memory, or specific control functions in electronic devices.

Technological Development

The process of research and innovation that leads to the introduction of new technologies or the improvement of existing ones.

Industrial Revolution

A period of major industrialization from the late 18th to early 19th century that transformed mainly agrarian, rural societies in Europe and America into industrialized, urban ones.