Ready Company has two operating (production) departments: Assembly and Painting. Assembly has 150 employees and occupies 44,000 square feet; Painting has 100 employees and occupies 36,000 square feet. Indirect factory expenses for the current period are as follows: Administration is allocated based on workers in each department; maintenance is allocated based on square footage. The amount of maintenance expenses that should be allocated to the Assembly Department for the current period is:
A) $48,000.
B) $ 55,000.
C) $103,000.
D) $104,000.
E) $110,000.

Question

Ready Company has two operating (production) departments: Assembly and Painting. Assembly has 150 employees and occupies 44,000 square feet; Painting has 100 employees and occupies 36,000 square feet. Indirect factory expenses for the current period are as follows:  Administration is allocated based on workers in each department; maintenance is allocated based on square footage. The amount of maintenance expenses that should be allocated to the Assembly Department for the current period is:
A) $48,000. 
B) $ 55,000. 
C) $103,000. 
D) $104,000. 
E) $110,000.

Quizplus · Accepted Answer

Maintenance $100,000 × [44,000/(44,000 + 36,000)] = $55,000

Ready Company Has Two Operating (Production) Departments: Assembly and Painting