Question

CakeCo, Inc. has three operating departments. Information about these departments is listed below. Maintenance is service department at CakeCo that incurred $13,800 of costs during the period.
a) 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 $ 34,000 $ 28,000 $ 22,000

Sq. ft. of space 2,300 3,450 1,150

Answer 1

Answer:

$6900

Explanation:

The allocated maintenance cost to baking department is the fair share of baking department from the total maintenance cost incurred based on the floor space that the department occupied compared to other departments.

Allocated maintenance=total maintenance cost/total floor space*baking department's floor space

total maintenance cost is $13,800

baking department's floor space=3450 sq ft

total floor space=2,300+3450+1150=6900  sq.ft

allocated maintenance cost=$13,800/6900*3450=$6900