Maintenance costs at Sturgeon Company are allocated to the production departments based on area occupied.Maintenance costs of $300,000 are budgeted to maintain a 60,000 square foot production area.If the finishing department occupies 25,000 square feet, how much of the maintenance department costs will be allocated to the finishing department?
A)$125,000
B)$175,000
C)$100,000
D)$5,000

Question

Quizplus · Accepted Answer

The maintenance costs are allocated based on the area occupied. The finishing department occupies 25,000 out of 60,000 square feet, which is 25,000/60,000 = 5/12 of the total area. Therefore, it will be allocated 5/12 of the total maintenance costs: 5/12 * $300,000 = $125,000.

Maintenance Costs at Sturgeon Company Are Allocated to the Production