Question
Blossom Company has a Maintenance Department that services the equipment in only three operating departments: Cutting, Forming, and Painting Departments. The cost of this servicing
Blossom Company has a Maintenance Department that services the equipment in only three operating departments: Cutting, Forming, and Painting Departments. The cost of this servicing is charged to the operating departments on the basis of machine-hours. Data relating to the Maintenance Department costs are below:
Actual Budgeted
Variable costs $44,683 $45,000
Fixed costs $30,200 $19,000
Data for the three operating departments follow:
Cutting Forming Painting
Budgeted Machine-Hours 3,000 7,500 4,500
Actual Machine-Hours 2,870 7,490 4,350
Long-run average Machine-Hours 2,800 7,200 4,000
Q:) How much, if any, of the actual Maintenance Department costs should NOT be charged to the three operating departments for evaluation purposes?
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