Brownley Company has two service departments and two operating (production) departments. The Payroll Department services all three of the other departments in proportion to the number of employees in each. The Maintenance Department costs are allocated to the two operating departments in proportion to the floor space used by each. Listed below are the operating data for the current period: The total cost of operating the Milling Department for the current period is:
A) $14,280.
B) $15,912.
C) $76,500.
D) $90,780.
E) $92,412.

Question

Brownley Company has two service departments and two operating (production) departments. The Payroll Department services all three of the other departments in proportion to the number of employees in each. The Maintenance Department costs are allocated to the two operating departments in proportion to the floor space used by each. Listed below are the operating data for the current period:  The total cost of operating the Milling Department for the current period is:
A) $14,280. 
B) $15,912. 
C) $76,500. 
D) $90,780. 
E) $92,412.

Quizplus · Accepted Answer

Step 1: Allocate Payroll costs to Maintenance, Milling, and Assembly departments:
 11eaadfd_ccb2_7565_95d8_4f6af39d6590_TB6948_00 Step 2: Allocate Maintenance costs to Milling Department
($25,500 + 4,080) × (10,000/25,000) = $11,832
Step 3: Total Milling costs = $76,500 + 4,080 + 11,832 = $92,412

Brownley Company Has Two Service Departments and Two Operating (Production)