Ready Company has two operating (production) departments: Assembly and Painting.

Question

Ready Company has two operating (production) departments: Assembly and Painting. Assembly has 200 employees and occupies 50,400 square feet; Painting has 50 employees and occupies 33,600 square feet. Indirect factory expenses for the current period are as follows: Administration $ 82,000 Maintenance S102,000 Administration is allacated based on workers in each department; maintenance is allocated based on square footage. The total amount of indirect factory expenses that should be allocated to the Painting Department for the current period is: Multiple Choice S57,200. $65,500. S114,400.

Explanation / Answer

Administration cost/worker=82000/(200+50)=$328

Maintenance cost/square footage=102000/(50400+33600)=$1.214285714

Hence total indirect expenses for PAinting department=(328*50)+($1.214285714*33600)

=$57200

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