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CakeCo, Inc. has three operating departments. Information about these departments is listed below. Maintenance is service department at CakeCo that incurred $12,000 of costs during the period. If allocated maintenance cost is based on floor space occupied by each of the operating departments, compute the amount of maintenance cost allocated to the Baking Department.

Mixing Baking Packaging
Direct costs $ 21,000 $ 15,000 $ 9,000
Sq. ft. of space 1,000 1,500 500

a. $1,200.
b. $6,000.
c. $4,000.
d. $400.
e. $7,500.

Respuesta :

Answer:

Option (B) is correct.

Explanation:

Total Maintenance cost = $12,000

Cost Driver = Floor Space

costs during the period = $12,000

Total Floor Space:

= (1,000 + 1,500 + 500)

= 3,000 Sq feet

Allocation of Maintenance cost to Baking Department:

= (Maintenance cost ÷ Total Floor Space ) × Baking Department Floor Space

= (12,000 ÷ 3,000) × 1,500

= $6,000 (Answer)

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