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.

Question

Business

Nehemiah Levy

28 January, 18:35

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.

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Vaughn Byrd · Answer 1

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