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Braun Company has one service department and two operating (production) departments. Maintenance Department costs are allocated to the two operating departments based on square feet occupied. Listed below are the operating data for the current period:

Department Direct Expenses Square Feet
Maintenance $25,500
Milling 76,500 10,000
Assembly 105,400 15,000

The total cost of operating the Assembly Department for the current period is: _________



Sagot :

Answer:

Total operating expenses for assembly department $120,700

Explanation:

The computation of the total operating cost for the assembly department is given below;

Given that

Maintainance department direct expenses is $25500

Here we have to divided into 2 departments

So the new ratio is 10,000: 15,000

i.e. direct expenses with respect to the maintenance department share per square feet is  

= $25500 ÷ (10000 + 15000)

= $1.02 per square feet.

Now total direct expenses for the assembly department :

Direct expenses  $105400

Add: Allocation of maintenance department direct expenses ($1.02 × 15000 square feet)   $15300

Total operating expenses for assembly department $120,700

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