The Fixed Cost of Operating the Maintenance Facility of Cuyahoga

Essay

The fixed cost of operating the maintenance facility of Cuyahoga County Hospital is $3,900,000 annually. It incurs variable costs at the rate of $40 per labor- hour of maintenance. The facility averages 60,000 maintenance hours a year. Budgeted and actual hours per user were as follows: $\begin{array}{lll}& \text { Budgeted hours } & \text { Actual hours } \\\text { Operating } & 16,000 & 15,100 \\\text { Patient care } & 42,000 & 45,000 \\\text { Administration } & 2,000 & 1,800 \\\text { Total } & 60,000 & 61,900\end{array}$ Required:
a. How much would the Patient Care Department receive in maintenance costs if a single rate is used based on budgeted hours?
b. How much would the Operating Department receive in maintenance costs if a dual rate is used with fixed costs allocated on budgeted hours and variable costs allocated on actual hours?