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17 June, 12:23

Mervon Company has two operating departments: mixing and bottling.

Mixing has 300 employees and Bottling has 200 employees.

Indirect factory costs include administrative costs of $160,000.

Administrative costs are allocated to operating departments based on the number of workers.

Determine the administrative costs allocated to each operating department.

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  1. 17 June, 15:45
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    Administrative costs allocated to Mixing: $96,000;

    Administrative costs allocated to Bottling: $64,000.

    Explanation:

    Total number of employees = Number of employees in Mixing + Number of employees in Bottling = 300 + 200 = 500 employees.

    Number of administrative cost allocation per 01 employees = 160,000 / 500 = $320 per employees.

    Administrative costs allocated to Mixing = Number of administrative cost allocation per 01 employees x Number of Employees in Mixing = 320 x 300 = $96,000

    Administrative costs allocated to Bottling = Number of administrative cost allocation per 01 employees x Number of Employees in Bottling = 320 x 200 = $64,000.
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