9. Rapone Corporation\'s Maintenance Departme provides services to the company\'
ID: 2524392 • Letter: 9
Question
9. Rapone Corporation's Maintenance Departme provides services to the company's two perating divisions-the Paints Division and the Stains Division. The variable costs ot the Maintenance Department are budgeted based on the number of cases produced y the operating departments. The fixed costs of the Maintenance Department are budgeted b on the number of cases the operating ased Data appear below:roduced by the operating departments during the peak periosd. Maintenance Department Budgeted variable cost S3 per cae Budgeted total fixed cost $376,000 35% 20,000 Paints Division Percentage of peak period capacity required Actual cases Stains Division Percentage of peak period capacity required 65% 52.000 Actual case For performance evaluation purposes, how much Maintenance Department cost charged to the Paints Division at the end of the year? should be A. $261,600 B. $396,000 C. $277,200 D. $220,000Explanation / Answer
Maintainance dept cost charged to Paint division = variable cost + fixed cost due to paint division
Variable costs charged on basis of number of cases produced = actual cases of paint division * variable cost per unit
= 20000 * 3
= $60000
Fixed cost charged on basis of percentage of peak period cases = fixed costs of main. dept * %of peak period cases of paint div
= 576000 * 35%
= $2,01,600
Total cost of maintenance dept charged to Paint div = 60000 + 201600
= $2,61,600
Hence, answer is A.
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