The Fixed Costs of Operating the Maintenance Facility of Indian

question 94

Essay

The fixed costs of operating the maintenance facility of Indian River 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 20X3 are as follows: $$\begin{array} { | l | r | r | } \hline & \text { Budgeted hous } & \text { Actual hours } \\\hline \text { Building and grounds } & 10,000 & 12,000 \\\hline \text { Operating and emergency } & 8,000 & 8,000 \\\hline \text { Patient care } & 21,000 & 22,000 \\\hline \text { Administration } & \underline{ 1,000 }& \underline{ 1,200} \\\hline \text { Total } & 40,000 & 43,200 \\\hline\end{array}$$
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? Based on budgeted 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?

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