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 38,400 square feet. Assembling has 3,200 employees and occupies 27,600 square feet. Finishing has 800 employees and occupies 62,000 square feet. Indirect factory costs for the current period were Administrative $560,000 and Maintenance $700,000. 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 above data, determine the maintenance cost allocated to each operating department of Bridgestreet, Inc.

Option E

Option B

Option D

Option C

Option A

Bridgestreet, Inc. has three operating departments: Cutting, Assembling, and Finishing. Cutting has 4,000 employees and occupies 38,400 square feet. Assembling has 3,200 employees and occupies 27,600 square feet. Finishing has 800 employees and occupies 62,000 square feet. Indirect factory costs for the current period were Administrative $560,000 and Maintenance $700,000. 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

$339,063

overhead

cost

Basis

Of

apportionment

CUTTING

ASSEMBLY

FINISHING

TOTAL

AREA sq ft

38,400

27,600

62,000

128,000

MAINTENANCE

$700,000

area

700,000 X 38400/128,000

$210,000

700,000 X

27.600/128,000

$150938

700,000 X

62,000/128,000

$339063

$339,063

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