Question

The following is a partially completed lower section of a departmental expense allocation spreadsheet for Brickland. It reports the total amounts of direct and indirect expenses for the four departments. Purchasing department expenses are allocated to the operating departments on the basis of purchase orders. Maintenance department expenses are allocated based on square footage. Compute the amount of Maintenance department expense to be allocated to Assembly.
Purchasing Maintenance Fabrication Assembly
Operating costs $46,000 $26,400 $110,000 $76,000
No. of purchase orders 14 6
Sq.ft. of space 4,000 2,000

a. $17,600.
b. $8,800.
c. $13,200.
d. $13,800.
e. $32,200.

Answer 1

Answer:

Option (B) is correct.

Explanation:

Total Square foot of space:

= Fabrication + Assembly

= 4,000 + 2,000

= 6,000

Maintenance expense is allocated on the basis of square footage .

So, maintenance expense allocated to assembly :

= (Maintenance Operating costs ÷ Total Square foot of space) × Assembly  Square foot of space

= ($26,400 ÷ 6,000) × 2,000

= $4.4 × 2,000

= $8,800