CakeCo, Inc. has three operating departments. Information about these departments is listed below. Maintenance is service...
CakeCo, Inc. has three operating departments. Information about
these departments is listed below. Maintenance is service
department at CakeCo that incurred $12,000 of costs during the
period. If allocated maintenance cost is based on floor space
occupied by each of the operating departments, compute the amount
of maintenance cost allocated to the Baking Department.
| Mixing | Baking | Packaging | |||||||||||||
| Direct costs | $ | 21,000 | $ | 15,000 | $ | 9,000 | |||||||||
| Sq. ft. of space | 1,000 | 1,500 | 500 | ||||||||||||
Multiple Choice
-
$1,200.
-
$6,000.
-
$4,000.
-
$400.
-
$7,500.
Homework Answers
Answer : Allocation of Maintenance to Baking Department = $6,000
Total Maintenance cost = $12,000
Cost Driver = Floor Space
Total Floor Space = (1000+1500+500) = 3000 Sq feet
Allocation of Maintenance cost to Baking Depratment
= (Maintenance cost / Total Floor Space ) * Baking Department Floor Sapce =
=( 12,000/ 3000) * 1,500 = $6,000 (Answer)
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