Mervon Company has two operating departments: mixing and bottling. Mixing occupies 22,000 square feet. Bottling occupies 18,000 square feet. Indirect factory costs include maintenance costs of $200,000. 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

Quinton Herrera

Business

4 April, 09:03

Mervon Company has two operating departments: mixing and bottling. Mixing occupies 22,000 square feet. Bottling occupies 18,000 square feet. Indirect factory costs include maintenance costs of $200,000. 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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Antony Casey · Answer 1

Instructions are listed below.

Explanation:

Giving the following information:

Mixing occupies 22,000 square feet. Bottling occupies 18,000 square feet. Indirect factory costs include maintenance costs of $200,000. The maintenance costs are allocated to operating departments based on square footage occupied.

Total square feet = 40,000

Mixing = 22,000/40,000 = 0.55*200,000 = $110,000

Bottling = 18,000/40,000 = 0.45*200,000 = $90,000