(Appendix 11B) Ghia Manufacturing Corporation charges its Maintenance Department's service costs to two operating departments, Fabrication and Assembly. Charges are made on the basis of machine-hours. Information pertaining to machine-hours for the year follows:
The following costs pertain to the Maintenance Department:

-For performance evaluation purposes,how much of the Maintenance Department's fixed cost should be charged to the Assembly Department at year-end?
A) $315,000
B) $337,500
C) $345,600
D) $384,000

Question

(Appendix 11B) Ghia Manufacturing Corporation charges its Maintenance Department's service costs to two operating departments, Fabrication and Assembly. Charges are made on the basis of machine-hours. Information pertaining to machine-hours for the year follows:
  The following costs pertain to the Maintenance Department:
 
-For performance evaluation purposes,how much of the Maintenance Department's fixed cost should be charged to the Assembly Department at year-end?
A) $315,000 
B) $337,500 
C) $345,600 
D) $384,000

Quizplus · Accepted Answer

Fixed charges = Percentage of peak--period capacity required × Budgeted fixed cost
= 76.8% × $500,000 = $384,000

(Appendix 11B) Ghia Manufacturing Corporation Charges Its Maintenance Department's Service