Question

Flamingos, Inc. has four departments. The Administrative Department costs are allocated to the other three departments based on the number of employees in each and the Maintenance Department costs are allocated to the Assembly and Packaging Departments based on their occupied space. Data for these departments follows: Admin. Maintenance Assembly Packaging Operating costs $30,000 $15,000 $70,000 $45,000 No. of employees 2 6 4 Sq. ft. of space 2,000 3,000 What is the total amount of the Administrative Department's cost that would eventually be allocated to the Packaging Department?

Answer 1

Answer:

Allocated costs= $9,900

Explanation:

Giving the following information:

The Administrative Department costs are allocated to the other three departments based on the number of employees in each.

Costs:

Administration= $30,000

No. of employees:

Maintanance= 2

Assembly= 6

Packaging= 4

First, we need to calculate the proportion of employees in each department:

total employees= 12

Maintanance= 2/12= 0.17

Assembly= 6/12= 0.5

Packaging= 4/12= 0.33

Now, we can allocate the administrative costs to Packaging:

Allocated costs= 0.33*30,000= $9,900