Mervon Company has two operating departments: mixing and bottling. Mixing occupies 25,920 square feet. Bottling occupies 17,280 square feet. Indirect factory costs include maintenance costs of $238,000. 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.

Question

Business

Charlie Simmons

19 September, 18:46

Mervon Company has two operating departments: mixing and bottling. Mixing occupies 25,920 square feet. Bottling occupies 17,280 square feet. Indirect factory costs include maintenance costs of $238,000. 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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Answers (1)

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Keenan Mueller · Answer 1

Mixing = 25,920 square feet

Bottling = 17,280 square feet

Total 43,200 square feet

Maintenance cost allocated to each operating department:

Mixing = 25,920/43,200 x $238,000 = $142,800

Bottling = 17,280/43,200 x $238,000 = $95,200

Explanation:

In this scenario, we need to calculate the total square feet. The maintenance cost allocated to each operating department is the square feet occupied by each department divided by total square feet multiplied by total maintenance cost.