Baker Corporation has two operating departments, Machining and Assembly, and an office. The three categories of office expenses are allocated to the two departments using different allocation bases. The following information is available for the current period: The amount of the total office expenses that should be allocated to Assembly for the current period is:
A) $35,750.
B) $45,000.
C) $54,250.
D) $90,000.
E) $600,000.

Question

Baker Corporation has two operating departments, Machining and Assembly, and an office. The three categories of office expenses are allocated to the two departments using different allocation bases. The following information is available for the current period:  The amount of the total office expenses that should be allocated to Assembly for the current period is:
A) $35,750. 
B) $45,000. 
C) $54,250. 
D) $90,000. 
E) $600,000.

Quizplus · Accepted Answer

The total office expenses to be allocated is $162,500. 
The allocation base for Machining is machine hours, and they used 22,000 machine hours out of the total of 40,000 for both departments, giving them a percentage of 55% ($89,375). 
The allocation base for Assembly is direct labor hours, and they used 17,500 direct labor hours out of the total of 30,000 for both departments, giving them a percentage of 58.33% ($54,167). 
Therefore, the amount of total office expenses that should be allocated to Assembly is $54,167, rounded to the nearest dollar.

Baker Corporation Has Two Operating Departments, Machining and Assembly, and an Office