Tasman Products Ltd Of Australia Has A Maintenance Department That

Tasman Products, Ltd., of Australia has a Maintenance Department that services the equipment in the company’s Forming Department and Assembly Department. The cost of this servicing is charged to the operating departments on the basis of machine-hours. Cost and other data relating to the Maintenance Department and to the other two departments for the most recent year are presented below. (The currency in Australia is the Australian dollar.) Data for the Maintenance Department follow:

Data for the Forming and Assembly departments follow:

The level of fixed costs in the Maintenance Department is determined by peak-period requirements.

Required:

Management would like data to assist in comparing actual performance to planned performance in the Maintenance Department and in the other departments.

1.         How much Maintenance Department cost should be charged to the Forming Department and to the Assembly Department? Show all computations.

2.         Should any portion of the actual Maintenance Department costs not be charged to the other departments? If all costs should be charged, explain why; if a portion should not be charged, compute the amount and explain why it should not be charged.

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