Wilson Trade School allocates administrative costs to its respective departments

Question

Wilson Trade School allocates administrative costs to its respective departments based on the number of students enrolled, while maintenance and utilities are allocated per square feet of classrooms. Based on the information below, what is the total amount of expenses allocated to the Automotive Department (rounded to the nearest dollar) if administrative costs for the school were $50,000, maintenance fees were $12,000, and utilities were $6,000?

Department Students Classrooms
Electrical 120 10,000 sq ft
Automotive 70 12,000 sq ft
Secretarial 50 8,000 sq ft
Plumbing 40 6,000 sq ft

Explanation / Answer

Department Students Classrooms Electrical..... 120 ......... 10,000sq. ft Automotive.... 70 .......... 12,000sq ft Secretarial..... 50............ 8,000sq ft Plumbing....... 40............. 6,000 sq ft Total..............280...........36,00… sq ft Admin costs for the school were $50,000, so admin costs for the Automotive dept. = 70/280 x 50,000 = $12,500. maintenance fees were $12,000, so maintenance fees for the Automotive dept = 12,000/36,000 x 12,000 = $4,000 utilities were $6,000, so utilities for the Automotive dept = 12,000/36,000 x 6,000 = $2,000 So the total amount allocated to the Automotive Department = $12,500 + $4,000 + $2,000 = $18,500. Answer is $18,500

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