Question

eady Company has two operating (production) departments: Assembly and Painting. Assembly has 250 employees and occupies...

eady Company has two operating (production) departments: Assembly and Painting. Assembly has 250 employees and occupies 54,000 square feet; Painting has 200 employees and occupies 26,000 square feet. Indirect factory expenses for the current period are as follows: Administration $90,000 Maintenance $119,000 Administration is allocated based on workers in each department; maintenance is allocated based on square footage. The total amount of indirect factory expenses that should be allocated to the Assembly Department for the current period is (Do not round your intermediate calculations and round your final answer to the nearest whole dollar amount): $50,000. $130,325. $80,325. $129,000. $131,325.

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Answer #1

The  correct answer is $ 130,325

Note :

1. Total Activity :

Employees Square Feet
Assembly 250 54,000
Painting 200 26,000
450 80,000

2.

Activity Rate :

Indirect Expenses Activity Driver Activity Activity Rate ( Indirect Expense / Activity)
Administration 90,000 Workers 450 employee 200
Maintenance 1,19,000 Square Feet 80000 square feet 1.4875

3.

Allocated Cost :

Administration = $ 200 * 250 Employees

= $ 50,000

Add: Maintenance = $ 1.4875 * 54,000 square feet

= $ 80,325

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