Question

QS 24-7 Allocating costs to departments LO P2

Mervon Company has two operating departments: mixing and bottling. Mixing occupies 23,650 square feet. Bottling occupies 19,350 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.

Department	Sq. Feet	% of Total	Maint. Exp. to Allocate	Allocated Amount
Mixing
Bottling
Total

Answer 1

The correct answer is :

Department	Sq. Feet	% of Total	Maint. Exp. to Allocate	Allocated Amount
Mixing	23,650	0.55	238,000	130,900
Bottling	19,350	0.45	238,000	107,100
Total	43,000	1		238,000

Notes:

Department	Sq. Feet (Given)	% of Total ( Respective Sq Feet / Total Sq Feet)	Maint. Exp. to Allocate (Given)	Allocated Amount (Respective % of Total  * Maint. Exp. to Allocate)
Mixing	23650	0.55	238000	130900
Bottling	19350	0.45	238000	107100
Total	43000	1	238000	238000