Question

Mervon Company has two operating departments: mixing and bottling. Mixing occupies 23,045 square feet. Bottling occupies 18,855 square feet. Indirect factory costs include maintenance costs of $204,000. 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.

Answer 1

Answer:

Mixing= $112,000

Bottling= $91,800

Explanation:

Giving the following information:

Mixing occupies 23,045 square feet

Bottling occupies 18,855 square feet.

Total sq= 41,900

Indirect factory costs include maintenance costs of $204,000.

First, we need to calculate the proportion of square feet for each department:

Mixing= 23,045/41,900= 0.55

Bottling= 18,855/41,900= 0.45

Now, we can allocate overhead:

Mixing= 0.55*204,000= $112,000

Bottling= 0.45*204,000= $91,800