Mervon Company has two operating departments: mixing and bottling. Mixing occupies 24,360 square feet. Bottling occupies 16,240 square feet. Indirect factory costs include maintenance costs of $216,000. If the maintenance costs are allocated to operating departments based on square footage occupied, determine the amount of maintenance costs allocated to each operating department.

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Business

Izabelle

7 December, 12:38

Mervon Company has two operating departments: mixing and bottling. Mixing occupies 24,360 square feet. Bottling occupies 16,240 square feet. Indirect factory costs include maintenance costs of $216,000. If the maintenance costs are allocated to operating departments based on square footage occupied, determine the amount of maintenance costs allocated to each operating department.

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Ryann Larson · Answer 1

Allocated costs:

Mixing = $129,600

Bottling = $86,400

Explanation:

Giving the following information:

Mervon Company has two operating departments: mixing and bottling. Mixing occupies 24,360 square feet. Bottling occupies 16,240 square feet. Indirect factory costs include maintenance costs of $216,000. The maintenance costs are allocated to operating departments based on square footage occupied.

Total square feet = 24,360 + 16,240 = 40,600

Average square feet:

Mixing = 24,360/40,600 = 0.6

Bottling = 0.4

Allocated costs:

Mixing = 0.6*216,000 = $129,600

Bottling = 0.4*216,000 = $86,400