The maintenance department of the ABC Corp. provides services to the other depar

Question

The maintenance department of the ABC Corp. provides services to the other departments of the company. The table below shows the costs of this department at standard workload (3,000 working hours) and at excessive workload in the month of May (4,200 working hours). Salary of engineers and parts used in repairs vary with the output, the other costs don't vary. Calculate the amount of the maintenance department costs that should be allocated to the sales department, if in ordinary months the sales department consumes 1, 200 working hours of the maintenance department; however in December the maintenance department worked 2,940 hours for the sales department.

Explanation / Answer

Solution.

Calculation for cost of maintenance department should be allocated to sales department.

Here in the month of december sales department used 2,940 hour of maintenance department so we use data of 3,000 hour working standerd.

Particular Excessive Workload Cost Excessive Workload Hour Cost per hour Hour worked in december Cost of December Salary of engineers            50,000.00                      3,000                 16.67                      2,940      49,000.00 Salary of the head of department            72,000.00                      3,000                 24.00                      -   parts of repairs            15,000.00                      3,000                    5.00                      2,940      14,700.00 Rent payments for equipment            80,000.00                      3,000                 26.67                      -   Rent payment for building            60,000.00                      3,000                 20.00                      -   Total      63,700.00

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