Question

The following is a partially completed lower section of a departmental expense allocation spreadsheet for Brickland. It reports the total amounts of direct and indirect expenses for the four departments. Purchasing department expenses are allocated to the operating departments on the basis of purchase orders. Maintenance department expenses are allocated based on square footage. Compute the amount of Maintenance department expense to be allocated to Assembly. (Do not round your intermediate calculations.) Purchasing Maintenance Fabrication Assembly Operating costs $36,000 $20,400 $100,000 $66,000 No. of purchase orders 15 5 Sq.ft. of space 3,500 2,500$27,000.$9,000.$11,900.$10,200.$8,500.

Answer 1

Answer:

The correct option is $8,500

Explanation:

Since the question was asked about the allocation of maintenance department expense to assembly and the maintenance department expense is based on the square footage.

So, the following equation should be used which is shown below:

= Maintenance department expense × assembly square foot space ÷ total sum of square foot space

where,

Maintenance department expense is $20,400

Assembly square footage is 2,500

And, the total sum of square foot space equals to

=  Fabrication square foot space + assembly square foot space

= 3,500 + 2,500

= 6,000

Now, put these values on the above equation.

So, the value would be equals to

= $20,400 × 2,500 ÷ 6,000

= $20,400 × 0.41667

= $8,500

The other cost is irrelevant. Thus, it is ignored while computation.

Hence, the amount of Maintenance department expense to be allocated to Assembly is $8,500

Therefore, the correct option is $8,500