Problems in Variance analysis in Responsibility Accounting

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

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

Actual data ( end of the month):

Maintenance hours worked                           3,455
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

Actual data (end of the month):

Number of employees in factory and office                          1,165
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.
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