Engineered and discretionary overhead costs, unused capacity, repairs and maintenance.

Rowland Corporation manufactures gears using turning machines. In 2007, Rowland’s turning machines operated for 80,000 hours. Rowland employed four workers in its repairs and mainte¬

nance area to fix and repair machines diat have broken down or are functioning improperly. In 2007, each repairs and maintenance person was paid a fixed annual salary of $48,000 for 250 days ofwork at eight hours per day. During 2007, the workers spent 6,000 hours on repairs and maintenance.

Required 1. Do you think repairs and maintenance costs at Rowland Corporation are engineered costs or discretionary costs? Explain your answer.

2. Assume repairs and maintenance costs are engineered costs. Calculate the cost of unused repairs and maintenance capacity in 2007. Would you recommend that Rowland downsize its repairs and maintenance capacity? Explain your answer briefly.

3. Assume repairs and maintenance costs are discretionary costs. Calculate the cost ofunused repairs and maintenance capacity in 2007.