Patti Company has two service departments, Maintenance and Personnel, as well as two production departments, Mixing and Finishing.Maintenance costs are allocated based on square footage while personnel costs are allocated bsed on number of employees.The following information has been gathered for the current year: $\begin{array}{lrrrr}&\text { Maintenance}&\text { Personnel}&\text { Mixing }&\text {Finishing }\\hline
\text { Direct dept. costs } & \$ 126,000 & \$ 84,000 & \$ 105,000 & \$ 175,000 \
\text { Square footage } & 800 & 400 & 1,600 & 1,200 \
\text { Number of employees } & 8 & 12 & 24 & 32
\end{array}$ If the direct method is used to allocate costs, the total cost of the Finishing Department after allocation would be _____.

Question

Quizplus · Accepted Answer

The total cost of the Finishing Department after allocation includes its direct costs plus the allocated Maintenance and Personnel costs. First, calculate the total square footage and total number of employees to allocate costs correctly.Total square footage = 800 + 400 + 1,600 + 1,200 = 4,000Total number of employees = 8 + 12 + 24 + 32 = 76Maintenance costs allocation to Finishing:$$ \frac{1,200}{4,000} \times \$126,000 = \$37,800 $$Personnel costs allocation to Finishing:$$ \frac{32}{76} \times \$84,000 = \$35,200 $$Total allocated costs to Finishing = \$37,800 (Maintenance) + \$35,200 (Personnel) = \$73,000Adding the direct costs of the Finishing Department:$$ \$175,000 + \$73,000 = \$248,000 $$However, none of the provided options match this calculation. Given the options and the methodology, it seems there might have been a mistake in the calculation or in the interpretation of the options. The correct approach to allocate costs based on the given criteria has been demonstrated, but the final answer does not align with the provided choices, suggesting a possible error in the calculation or a misunderstanding of the question's requirements.

Patti Company Has Two Service Departments, Maintenance and Personnel, as Well