Reference no: EM132585651

SPI-W fixed costs of operating the maintenance facility are $4,500,000 annually. Variable costs are incurred at the rate of $30 per maintenance-hour. The facility averages 40,000 maintenance-hours a year. Budgeted and actual hours per user for the year are as follows:

                                                     Budgeted hours           Actual hours

Building and grounds                      10,000                        12,000

Operating and emergency                  8,000                         8,000

Patient care                                    21,000                           22,000

Administration                                   1,000                              1,200

Total                                                40,000                             43,200

Assume that budgeted maintenance-hours are used to calculate the allocation rates.

Required:

Question a. If a single-rate cost allocation method is used, what amount of maintenance cost will be budgeted for each department?

Question b. If a single-rate cost allocation method is used, what amount of maintenance cost will be allocated to each department based on actual usage?

Question c. If a dual-rate cost allocation method is used, what amount of maintenance cost will be budgeted for each department?

Question d. If a dual-rate cost allocation method is used, what amount of maintenance cost will be allocated to each department based on budgeted usage for fixed operating costs and actual usage for variable operating costs?