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 total amount of indirect factory 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 total amount of indirect factory 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

Administration is allocated based on workers in each department, so the allocation for Assembly will be:
(150/250) * $80,000 = $48,000

Maintenance is allocated based on square footage, so the allocation for Assembly will be:
(44,000/80,000) * $190,000 = $104,000

Therefore, the total amount of indirect factory expenses that should be allocated to the Assembly Department for the current period is:
$48,000 + $104,000 = $103,000.

Thus, the correct answer is C.

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