Question

Ready Company has two operating (production) departments: Assembly and Painting. Assembly has 150 employees and occupies 43,000 square feet; Painting has 150 employees and occupies 29,000 square feet. Indirect factory expenses for the current period are as follows: Administration $79,000 Maintenance $99,000 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):
a. $39,500.
b. $98,625.
c. $99,625.
d. $109,000.
e. $59,125

Answer 1

Answer:

b. $98,625.

Explanation:

Maintenance budget : $99,000

Assembly area: 43,000

Painting Area: 29,000

Maintenance budget allocated to assembly (M):

$M=99,000*\frac{43,000}{43,000+29,000}\\M=59,125$

Administration budget : $79,00

Assembly employees: 150

Painting employees: 150

Administration budget allocated to assembly (A):

$A=79,000*\frac{150}{150+150}\\M=39,500$

Therefore, the total amount of indirect factory expenses that should be allocated to the Assembly Department for the current period is:

$A = M + P\\A= 59,125 +39,500\\A=98,625$