Gabritz, Inc. has a maintenance department that provides services to the company's two operating departments. The variable costs of the maintenance department are charged on the basis of the number of maintenance hours logged in each department. Last year, budgeted variable maintenance costs were $7.50 per maintenance hour and actual variable maintenance costs were $7.80 per maintenance hour.The budgeted and actual maintenance hours for each operating department for last year appear below: Operating Department AOperating Department BBudgeted maintenance hours 3,000 2,500 Actual maintenance hours 3,100 2,700 ?Required: ?a. Compute the amount of variable maintenance department cost that should have been charged to each operating department at the end of the year for
performance evaluation purposes.?b. Compute the amount of actual variable maintenance department cost that should NOT have been charged to the operating departments at the end of the year for performance evaluation purposes.
What will be an ideal response?
a.
| Operating Department A | Operating Department B | |||||
| Variable cost charges: | ||||||
| 3,100 hours × $7.50 per hour | $ | 23,250 | ||||
| 2,700 hours × $7.50 per hour | $ | 20,250 | ||||
? | ||||||
| b. | ||||||
| Variable | ||
| Total actual costs incurred (3,100 hours + 2,700 hours) × $7.80 per hour | $ | 45,240 |
| Total charges (3,100 hours + 2,700 hours) × $7.50 per hour | 43,500 | |
| Spending variance (not charged) | $ | 1,740 |
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