Bridgestreet, Inc. has three operating departments: Cutting, Assembling, and Fin

Question

Bridgestreet, Inc. has three operating departments: Cutting, Assembling, and Finishing. Cutting has 4,000 employees and occupies 33,000 square feet. Assembling has 3,200 employees and occupies 24,000 square feet. Finishing has 800 employees and occupies 53,000 square feet. Indirect factory costs for the current period were Administrative $470,000 and Maintenance $587,500. Administrative costs are allocated to operating departments based on the number of workers and maintenance costs are allocated to operating departments based on square footage occupied.

  

Based on the preceding data, determine the administrative cost allocated to each operating department of Bridgestreet, Inc.

Option B

Option C

Option A

Option E

Option D

Bridgestreet, Inc. has three operating departments: Cutting, Assembling, and Finishing. Cutting has 4,000 employees and occupies 33,000 square feet. Assembling has 3,200 employees and occupies 24,000 square feet. Finishing has 800 employees and occupies 53,000 square feet. Indirect factory costs for the current period were Administrative $470,000 and Maintenance $587,500. Administrative costs are allocated to operating departments based on the number of workers and maintenance costs are allocated to operating departments based on square footage occupied.

Explanation / Answer

Administrative cost allocated to each operating department of Bridgestreet, Inc. is as shown below:

So correct answer is Option D.

Total Cutting Assembly Finishing Administrative Cost 470,000 Number of workers 4,000 3,200 800 8,000 Cost allocated 235,000 470,000*4,000/8,000 188,000 470,000*3,200/8,000 47,000 470,000*800/8,000 470000

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