# Has decided to establish a machine maintenance

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Unformatted text preview: proach? Under the three-cost-center approach? Make your computations below. For One Cost Center For Three Cost Centers ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• Answer: If we use only one cost center, our computation would look as follows: Direct and administrative salaries (\$40,000+\$50,000+\$35,000) Supplies (administrative and customer-related) (\$14,425+\$13,575+\$12,000) Contracted services Total costs Hours of service Cost per unit \$125,000 40,000 10,000 \$175,000 15,625 \$11.20 If we were to use three cost centers, our analysis would give the same result, but with a very different structure: Cost items Administration Salaries \$40,000 Supplies 14,425 Contracted services ______ Total \$54,425 Hours of service — (1) Cost per hour of service C ost centers Mowing Special Projects \$50,000 \$35,000 13,575 12,000 10,000 \$73,575 \$47,000 11,772 3,853 \$6.25 \$12.20 Total...
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