The Turin Engine Plant of Este Italia S.p.A. manufactures engine blocks for automobiles. The firm…

The Turin Engine Plant of Este Italia S.p.A. manufactures engine blocks for automobiles. The firm produces three types of engine blocks: three, four, and sixcylinder. An engine block is the basic component of an automobile engine and contains the cylinders into which the pistons are fitted. After assembling the block with the head, pan, pistons, spark plugs, rods, camshaft, and valves, the motor is ready to be fitted with the fuel and exhaust systems and installed in the automobile. The engine block is cast from a single block of steel. The cylinders are bored by high-precision, computer-controlled machine tools. Then other machine tools tap and thread the block to attach the other engine components. The cylinder-boring department is the key process after the engine block is cast. Overhead is tracked to departments. The allocation base in the cylinder-boring department is machine hours, or the number of hours each block spends in the computer-controlled machine tool having its cylinders bored. Each of the three motor blocks requires the following standard machine hours per block:

Each block requires some set-up time to mount and correctly position the block in the computer-controlled machine tool. Hence, a six-cylinder block does not require twice the machining time of a three-cylinder block. Also, a cylinder in a three-cylinder block is larger and requires more boring time than does a cylinder in a four- or six-cylinder block. At the beginning of the year, management forecasts the number of blocks to be manufactured based on the projected unit sales of car models requiring three-, four-, and six-cylinder engines. The plant plans to produce 95,000 engine blocks using 67,500 machine hours. The budgeted production by block type and the standard machine hours per block are given in the following table.

During the year, production plans change as customer preferences become known. An unexpected increase in gasoline taxes causes consumers to shift toward smaller, more fuel-efficient automobiles with smaller engines. Fewer six-cylinder engines are made and more three- and four-cylinder engines are manufactured. The following table presents the actual operating results for the year.

What are the budgeted, standard, and actual machine hours?