Question

Brownley Company has two service departments and two operating (production) departments. The Payroll Department services all...

Brownley Company has two service departments and two operating (production) departments. The Payroll Department services all three of the other departments in proportion to the number of employees in each. The Maintenance Department costs are allocated to the two operating departments in proportion to the floor space used by each. Listed below are the operating data for the current period:

Service Depts. Production Depts.
Payroll Maintenance Milling Assembly
Direct costs $ 21,600 $ 28,500 $ 82,500 $ 117,400
No. of personnel 21 21 63
Sq. ft. of space 11,200 16,200


The total cost of operating the Milling Department for the current period is (Do not round your intermediate calculations):

Multiple Choice

  • $15,480.

  • $17,763.

  • $4,320.

  • $100,235.

  • $98,603.

    Flamingos, Inc. has four departments. The Administrative Department costs are allocated to the other three departments based on the number of employees in each and the Maintenance Department costs are allocated to the Assembly and Packaging Departments based on their occupied space. Data for these departments follows:

    Admin. Maintenance Assembly Packaging
    Operating costs $ 50,000 $ 35,000 $ 90,000 $ 65,000
    No. of employees 3 10 7
    Sq. ft. of space 2,000 3,000


    The total amount of the Administrative Department's cost that would eventually be allocated to the Packaging Department is:

    Multiple Choice

  • $7,800.

  • $19,500.

  • $17,500.

  • $29,500.

  • $22,000.

Business   Accounting   
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Homework Answers

Answer #1

Solution :

(1) The Answer is (d) $ 100,235.

(2) The Answer is (c) $ 17,500.

Woking :

(1)

Payroll Maintenance Millng Assembe
Department Cost before Allocation $ 21,600 $ 28,500 $ 82,500 $ 117,400
Allocation :
Payroll (21:21:63) ($ 21,600) $ 4,320 $ 4,320 12,960
Maintenance (11,200 : 16,200) ($ 32,820) $ 13,415 $ 19,405
Total $ 100,235 $ 149,765

(2)

Total Cost of Administrative Department = $ 50,000

Total Employees = 20

Allocation to Packing Department = $ 50,000 / 20 * 7

= $ 17,500  

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