Answer:
$95,000
Explanation:
Cost of service department is allocated to other departments based on the cost drivers used by each driver. I this question the Janitorial cost of $200,000 and cost of Cafeteria are being allocated.
Cutting and Assembly:
Square Feet Number of Employees
Janitorial Department 100 20
Cafeteria Department 10,000 10
Cutting Department 2,000 60
Assembly Department 8,000 20
Janitorial Department incurs costs of $200,000
Departments Janitorial Cafeteria Cutting Assembly Total
Janitorial Cost 0 $100,000 $20,000 $80,000 $200,000
Cafeteria 0 0 $75,000 $25,000 $100,000
Total Cost Allocated <u>$95,000</u> $105,000
Janitorial Cost (Based on Square feet )
Total Area = 20,000
Cafeteria = $200,000 x 10,000/ 20,000 = $100,000
Cutting = $200,000 x 2,000/ 20,000 = $20,000
Assembly = $200,000 x 8,000/ 20,000 = $80,000
Total Employee = 60 + 20 = 80
Cutting = $100,000 x 60/ 80= $75,000
Assembly = $100,000 x 20/ 80 = $25,000
Janitorial department area will not be included because cost of janitorial will not be allocated to janitorial department.
