20. Riemer, Inc. has four departments. Information about these departments Is li

Question

20. Riemer, Inc. has four departments. Information about these departments Is listed below. Maintenance is a service department If allocated maintenance cost is based on floor space occupied by each of the other departments, compute the amount of maintenance cost allocated to the Cutting Department (Do not round your intermediate computations) Maintenance Cutting Assembly Packaging Direct costs $43 550 1.050 2,050 2.500 Sq. ft. of space No. of employees O $3,000 O $16000 O $8,000 O $3274 O $2.269

Explanation / Answer

Total space occupied by other departments:

Maintenance cost per sq ft= total maintenance cost/ space occupied by other departments= 16000/5600= 2.86 per sq ft

Cost allocated to cutting department= sq ft occupied by cutting department * cost per sq ft= 1050* 2.86= 3000

First option 3000 is correct

Department Sq ft Cutting           1,050 Assembly           2,050 Packaging           2,500           5,600

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