Jose Ruiz manages a car dealer’s service department. His department is organized as a cost center. Costs for a recent quarter are shown below. Cost of parts $ 22,400 Mechanics’ wages 14,300 Manager’s salary 8,000 Building depreciation (allocated) 4,500 Shop supplies 1,200 Utilities (allocated) 800 Administrative costs (allocated) 2,200 Calculate the total costs that would appear on a responsibility accounting report for the service department.

Total Cost =     $37,900

Explanation:

Responsibility accounting  refers to a system where managers of different departments in a company are responsible and held accountable for the management of the controllable costs  in their department.

Here the controllable costs on the manager, Jose Ruiz are Cost of parts, the Mechanics wages  and Shop supplies.

Calculating  the total costs that would appear on a responsibility accounting for the service department would be :

Particulars                  Amount

Cost of parts              $22,400

Mechanics’ wages      $14,300

Shop supplies              $1,200

Total Cost                 $37,900

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