Question

Braun Company has one service department and two operating (production) departments. Maintenance Department costs are allocated to the two operating departments based on square feet occupied. Listed below are the operating data for the current period:
Department Direct Expenses Square Feet
Maintenance $52,500 23,000
Milling 94,500 46,000
Assembly 123,400 69,000
The total cost of operating the Assembly Department for the current period is:_____.

Answer 1

Answer:

$154,900

Explanation:

The computation of the total cost of operating the assembly department as follows:

= Direct expenses of assembly department + allocated amount

= $123,400 + $52,500 × 69,000 ÷ (69,000 + 46,000)

= $123,400 + $52,500 × 69,000 ÷ 115,000

= $123,400 + $31,500

= $154,900