Practical capacity 9,500 hours Fixed costs of the Engineering Services Department in the 6,500 labor-hour to 9,500 labor-hour relevant range $285,000
Budgeted usage (quantity) of engineering services labor-hours required to support the productions departments:
Machining department 2,500 hours
Assembly department 5,000 hours
Total 7,500 hours
Budgeted variable cost per engineering services labor-hour in the 6,500 labor-hour to 9,500 labor-hour relevant range $30 per hour used
Actual usage (quantity) of engineering services labor-hours required to support the production departments:
Machining department 2,000 hours Assembly department 4,500 hours
Total 6,500 hours
1. Using the single-rate method, calculate the cost to be allocated to the Machining and Assembly Departments if the allocation rate is based on budgeted costs and budgeted quantity of Engineering Services and allocated based on actual Engineering Services hours used in each department.
2. Using the dual-rate method, calculate the cost to be allocated to the Machining and Assembly Departments if (a) variable costs are allocated based on the budgeted variable cost per hour for actual hours used in each department and (b) fixed costs are allocated based on budgeted fixed costs per hour and the budgeted number of hours for each department.
3. Using the single-rate method, calculate the cost to be allocated to the Machining and Assembly Departments if the allocation rate is based on budgeted costs and practical capacity of Engineering Services Department and allocated based on actual Engineering Services hours used in each department.