Fox Company has the following data concerning the machine-hours in its operating departments: Fixed costs of the maintenance department are budgeted at $30,000 per year.The fixed maintenance costs are incurred in order to service long-run average demand.The actual fixed maintenance cost was actually $32,000.How much fixed maintenance cost should be charged to Department B at the end of the year for performance evaluation purposes?
A)$12,000
B)$14,400
C)$15,000
D)$18,000

Question

Fox Company has the following data concerning the machine-hours in its operating departments:  Fixed costs of the maintenance department are budgeted at $30,000 per year.The fixed maintenance costs are incurred in order to service long-run average demand.The actual fixed maintenance cost was actually $32,000.How much fixed maintenance cost should be charged to Department B at the end of the year for performance evaluation purposes?
A)$12,000 
B)$14,400 
C)$15,000 
D)$18,000

Quizplus · Accepted Answer

Total average machine-hours: 10,000 + 30,000 + 20,000 = 60,000
Fixed maintenance cost to be charged to Department B
= $30,000 F1F1F1S1F1F1F10 (30,000 F1F1F1S1F1F1F10 60,000) = $15,000

Fox Company Has the Following Data Concerning the Machine-Hours in Its