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 $27,000 6,000 Milling 77,500 12,000 Assembly 106,400 18,000 The total cost of operating the Assembly Department for the current period is:_____.a. $91,800. b. $115,600. c. $105,400. d. $120,700. e. $130,900.

Answer 1

Answer:

$122,600

Explanation:

Maintenance department cost = $27,000

Assembly department cost = $106,400

Square feet occupied by Milling department = 12,000

Square feet occupied by Assembly department = 18,000

Total square feet occupied by two production departments = Square feet occupied by Milling department + Square feet occupied by Assembly department

= 12,000 + 18,000

= 30,000

Maintenance department cost allocated to Assembly department = Maintenance department cost * (Square feet occupied by Assembly department / Total square feet occupied by two production departments)

= 27,000 * (18,000/30,000)

= 27,000 * 0.6

= 16,200

The total cost of operating the Assembly department for the current period = Assembly department cost + Maintenance department cost allocated to Assembly department

= $106,400 + $16,200

= $122,600