Exercise: Analysis of rational full cost imputation differences Mr. Million, owner of the Solid company, lost his accountant who decided to retire. By analyzing the data left by the accountant, Mr. Million is a bit helpless. He then asks you to analyze the data for him. FGF annual budget Workshop A Workshop B Total FGF - variables $ 20,000 $ 50,000 $ 70,000 FGF - fixed $ 105,000 $ 300,000 $ 405,000 FGF - total $ 125,000 $ 350,000 $ 475,000 MOD hours 50,000 Hours-machine 50,000 Imputation rates are calculated based on machine hours in workshop A and based on direct labor hours in workshop B The accountant had established the general manufacturing costs budget for workshop B based on a planned shutdown of the machines during the month of August and the restart of the machines in early September. The restart costs had been estimated at $ 49,500 and this charge was included in the budgeted fixed manufacturing overheads. However, some customers demanded that delivery times be met and, in response, Mr. Million asked his employees to spread their vacation over the summer period. He hired three students to fill vacancies left by employees on vacation, thereby avoiding the shutdown of machines during the month of August. Actual costs incurred during the year: Workshop A Workshop B Total FGF - variables $ 19,000 $ 52,000 $ 71,000 FGF - fixed $ 107,000 $ 250,500 $ 357,500 FGF - total $ 126,000 $ 302,500 $ 428,500 MOD hours 46,500 Hours-machine 48,000 Since the direct workload was only $ 10,000 higher than expected, Mr. Million believes that the decision to avoid the machines shutdown followed by their restart in September was very beneficial for his business.