Bricks and Mortar Manufacturing produces building materials for local construction contractors. BMM has 2 production departments (Mixing and Firing) and 2 service departments (Maintenance and Cleaning). Maintenance costs are allocated based on machine hours used. Cleaning costs are allocated based on square feet of floor space.
The following data is available for BMM:
Mixing: 600 square feet of floor space, 200 machine hours used
Firing: 400 square feet of floor space, 500 machine hours used
Maintenance costs incurred: $4,900
Cleaning costs incurred: $2,300
How much of the Cleaning costs should be allocated to the Firing department?

Question

Quizplus · Accepted Answer

Total cost / Total use of driver × Use of driver by department
Total Cleaning Costs: $2,300
Total driver usage (square feet): 600 + 400 = 1,000 square feet
Allocation to Baking: $2,300 / 1,000 square feet × 400 square feet = $920.00

Bricks and Mortar Manufacturing Produces Building Materials for Local Construction