Question

The Maryville Construction Company occupies 98,000 square feet for construction of mobile homes. There are two manufacturing departments, finishing and assembly, and four service departments labeled S1, S2, S3, and S4. Information relevant to Maryville is as follows:

		Allocation
Department	Area used	S1	S2	S3	S4	Finishing	Assembly
S1	18,000	---	0.20	0.20	---	0.20	0.40
S2	4,750	---	---	0.30	0.30	---	0.40
S3	9,500	0.10	0.10	---	0.40	0.10	0.30
S4	4,750	0.30	0.10	0.30	---	0.20	0.10
Finishing	27,450	---	---	---	---	---	---
Assembly	33,550	---	---	---	---	---	---

Rent paid for the area used is $730,000.

How much rent is allocable to the assembly department using the direct method of allocation?

Multiple Choice

• $401,500.

• $607,542.

• $328,500.

• $249,913.

Answer 1

Answer) 401500

Explanations:

Rent allocated to assembly department using direct method of allocation:

Area used by Assembly department / Total Area used by Manufacturing Departments x Total Rent paid

33550 / (33550 + 27450) x 730000

= 401500