Mervon Company has two operating departments: Mixing and Bottling. Mixing occupies 25,380 square feet. Bottling occupies 16,920 square feet. Indirect factory costs include maintenance costs of $238,000.

Required:

a. If 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

Peppermint

13 October, 18:03

Mervon Company has two operating departments: Mixing and Bottling. Mixing occupies 25,380 square feet. Bottling occupies 16,920 square feet. Indirect factory costs include maintenance costs of $238,000.

Required:

a. If maintenance costs are allocated to operating departments based on square footage occupied, determine the amount of maintenance costs allocated to each operating department

+2

Answers (1)

Know the Answer?

Darian Blake · Answer 1

Mixing = $142,800

Bottling = $95,200

Explanation:

Th amount of indirect cost of maintenance to be allocated to the two departments would be as follows:

Allocated Maintenance department cost:

Mixing = 25,380 / (25,380 + 16,920) * $238,000 = 142800

Bottling = 16,920 / (25,380 + 16,920) * $238,000 = 95200

Allocated maintenance overheads

Mixing = $142,800

Bottling = $95,200