Question

CakeCo, Inc. has three operating departments. Information about these departments is listed below. Maintenance is service department at CakeCo that incurred $20,400 of costs during the period. If allocated maintenance cost is based on floor space occupied by each of the operating departments, compute the amount of maintenance cost allocated to the Baking Department.
Mixing Baking Packaging
Direct costs $ 36,000 $ 30,000 $ 24,000
Sq. ft. of space 2,500 3,750 1,250
a. $272.
b. $816.
c. $10,000.
d. $13,950.
e. $10,200.

Answer 1

Answer: e. $10,200.

Explanation:

Total Square ft. of space;

= 2,500 + 3,750 + 1,250

= 7,500 Sq. ft. of space

Baking Department occupies 3,750 ft² of that space so it will be apportioned a cost of;

= Proportion * total cost

= 3,750/7,500 * 20,400

= $10,200