Question

Mervon Company has two operating departments: mixing and bottling. Mixing occupies 24,360 square feet. Bottling occupies 16,240 square feet. Indirect factory costs include maintenance costs of $216,000. If the maintenance costs are allocated to operating departments based on square footage occupied, determine the amount of maintenance costs allocated to each operating department.

Answer 1

Answer:

Allocated costs:

Mixing= $129,600

Bottling= $86,400

Explanation:

Giving the following information:

Mervon Company has two operating departments: mixing and bottling. Mixing occupies 24,360 square feet. Bottling occupies 16,240 square feet. Indirect factory costs include maintenance costs of $216,000. The maintenance costs are allocated to operating departments based on square footage occupied.

Total square feet= 24,360 + 16,240= 40,600

Average square feet:

Mixing= 24,360/40,600= 0.6

Bottling= 0.4

Allocated costs:

Mixing= 0.6*216,000= $129,600

Bottling= 0.4*216,000= $86,400