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How much variable maintenance cost should be charged

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Question - Henry Company has an Equipment Services department which performs all needed maintenance work on the equipment in the company's Fabrication and Assembly departments. Costs of the Equipment Services department are charged to the Fabrication and Assembly departments on the basis of direct labor-hours. Data on direct labor-hours for the most recent year follow:

 

Fabrication

Assembly

Budgeted direct labor-hours

4,000

5,000

Actual direct labor-hours

5,000

7,000

The company budgeted its variable maintenance costs at $16,200 for the year. Actual variable maintenance costs totaled $22,800.

For purposes of measuring performance, how much variable maintenance cost should be charged to the Assembly Department at the end of the year?

A. $12,600

B. $12,160

C. $11,400

D. $6,600

Reference no: EM131632821

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