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Tasman Products, Limited, of Australia has a Maintenance Department that services the equipment in the company's Forming Department and Assembly Department. The cost of

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Tasman Products, Limited, of Australia has a Maintenance Department that services the equipment in the company's Forming Department and Assembly Department. The cost of this servicing is charged to the operating departments on the basis of machine-hours. Cost and other data relating to the Maintenance Department and to the other two departments for the most recent year are presented below. Data for the Maintenance Department follow: Budget $ 381,600* Actual $ 210,000 $ 490,080 $ 226,000 Variable costs for lubricants Fixed costs for salaries and other *Budgeted at $24 per machine-hour. Data for the Forming and Assembly Departments follow: Percentage of Peak- Forming Department Assembly Department Total Machine-Hours Period Capacity Required Budget Actual 60% 40% 100% 10,500 12,500 5,400 4,400 15,900 16,900 The level of fixed costs in the Maintenance Department is determined by peak-period requirements.

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