The cost of operating the quality control department of Ames Manufacturing includes $608,000 of fixed costs and $400,000 of variable costs. The department normally budgets 21,000 inspection hours a year. Two departments receive quality control checks, fabrication and assembly. Fabrication is budgeted at 1,000 hours a month, while assembly is budgeted the remainder.
Required:
a. In July, fabrication used 1,000 inspection hours and assembly used 800 hours. How much did each department receive in quality control costs assuming a single rate is used based on budgeted hours?
b. In August, fabrication used 1,200 inspection hours and assembly used 900 hours. How much did each department receive in quality control costs assuming a dual rate is used with budgeted usage for fixed costs and actual usage for variable costs?

Question

Quizplus · Accepted Answer

The Answer of The cost of operating the quality control department of Ames Manufacturing includes $608,000 of fixed costs and $400,000 of variable costs. The department normally budgets 21,000 inspection hours a year. Two departments receive quality control checks, fabrication and assembly. Fabrication is budgeted at 1,000 hours a month, while assembly is budgeted the remainder.
Required:
a. In July, fabrication used 1,000 inspection hours and assembly used 800 hours. How much did each department receive in quality control costs assuming a single rate is used based on budgeted hours?
b. In August, fabrication used 1,200 inspection hours and assembly used 900 hours. How much did each department receive in quality control costs assuming a dual rate is used with budgeted usage for fixed costs and actual usage for variable costs?

The Cost of Operating the Quality Control Department of Ames