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Billing Rates; Variance Analysis. The management of the Cemex Manufacturing Company thinks to have greater control over service departments and decides to create a billing rate for the Maintenance and Payroll Departments. For the month of October the following predetermined and actual operating and cost data have been made available:
Maintenance Department:
Predetermined data (beginning of the month):
Normal level of maintenance hours a month 3,200
Average hourly rate of maintenance worker $5.50
Normal level of maintenance hours a month 3,200
Average hourly rate of maintenance worker $5.50
Other maintenance costs:
Fixed Costs Variable Costs per
per Month Maintenance Labor Hour
Supervision $9,800 $.50
Tools and supplies 2,300 .75
Other miscellaneous items 700 .05
per Month Maintenance Labor Hour
Supervision $9,800 $.50
Tools and supplies 2,300 .75
Other miscellaneous items 700 .05
Actual data ( end of the month):
Maintenance hours worked 3,455
Maintenance workers earnings $19,610
Other costs (supervision, etc.) 16,390 Payroll Department:
Maintenance workers earnings $19,610
Other costs (supervision, etc.) 16,390 Payroll Department:
Predetermined data (beginning of the month):
Average number of employees in factory and office 1,200
Budgeted fixed costs for department $12,000
plus $2 for each employee in factory and office
Budgeted fixed costs for department $12,000
plus $2 for each employee in factory and office
Actual data (end of the month):
Number of employees in factory and office 1,165
Total costs in the payroll department $14,375
Total costs in the payroll department $14,375
Required: (1) The billing rate for the two departments. (2) A variance analysis for the two departments for the month of September.
