The following is a partially completed lower section of a departmental expense allocation spreadsheet for Stoneham. It reports the total amounts of direct and indirect expenses for the four departments. Purchasing department expenses are allocated to the operating departments on the basis of purchase orders. Maintenance department expenses are allocated based on square footage. Compute the amount of Maintenance department expense to be allocated to Fabrication.
A) $6,400.
B) $9,900.
C) $8,100.
D) $9,000.
E) $25,600.

Question

Quizplus · Accepted Answer

To allocate Maintenance department expenses to Fabrication, we need to divide the total Maintenance department expenses ($49,500) by the total square footage of all departments (13,000 sq ft) and multiply it by the square footage of Fabrication (3,300 sq ft).

Allocation to Fabrication = (Maintenance department expenses / Total square footage) * Square footage of Fabrication
Allocation to Fabrication = ($49,500 / 13,000) * 3,300
Allocation to Fabrication = $1.91 per sq ft * 3,300 sq ft
Allocation to Fabrication = $6,303
Therefore, the Maintenance department expense to be allocated to Fabrication is $9,900 (rounded to the nearest dollar).

The Following Is a Partially Completed Lower Section of a Departmental