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Calculating and Using Dual Charging Rates

The expected costs for the Maintenance Department of Stazler, Inc., for the coming year include:

Fixed costs (salaries, tools): $64,900 per year

Variable costs (supplies): $1.35 per maintenance hour

The Assembly and Packaging departments expect to use maintenance hours relatively evenly throughout the year. The Fabricating Department typically uses more maintenance hours in the month of November. Estimated usage in hours for the year and for the peak month is as follows:

	Yearly Hours	Monthly Peak Hours
Assembly Department	4,500	390
Fabricating Department	6,700	1,300
Packaging Department	10,800	910
Total maintenance hours	22,000	2,600

Actual usage for the year by:

Assembly Department	3,960
Fabricating Department	6,800
Packaging Department	10,000
Total maintenance hours	20,760

Required:

1. Calculate a variable rate for the Maintenance Department. Round your answer to the nearest cent. $ per maintenance hour

Calculate the allocated fixed cost for each using department based on its budgeted peak month usage in maintenance hours.

Department	Peak Number of Hours	Allocated Fixed Cost
Assembly		$
Fabricating
Packaging
Total		$

2. Use the two rates to assign the costs of the Maintenance Department to the user departments based on actual usage. Calculate the total amount charged for maintenance for the year.

Assembly	$
Fabricating
Packaging
Total	$

3. What if the Assembly Department used 4,000 maintenance hours in the year? How much would have been charged out to the three departments?

Assembly	$
Fabricating
Packaging
Total	$

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