Martina, Inc. has two service departments (Human Resources and Building Maintenance) and two production departments (Machining and Assembly). The company allocates Building Maintenance cost on the basis of square footage and believes that Building Maintenance provides more service than Human Resources. The square footage occupied by each department follows. $\begin{array} { l r }
\text { Human Resources } & 6,000 \
\text { Building Maintenance } & 13,000 \
\text { Machining } & 18,000 \
\text { Assembly } & 26,000
\end{array}$ Assuming use of the direct method, over how many square feet would the Building Maintenance cost be allocated (i.e., spread)?

Question

Martina, Inc. has two service departments (Human Resources and Building Maintenance) and two production departments (Machining and Assembly). The company allocates Building Maintenance cost on the basis of square footage and believes that Building Maintenance provides more service than Human Resources. The square footage occupied by each department follows. $\begin{array} { l r } 
\text { Human Resources } & 6,000 \
\text { Building Maintenance } & 13,000 \
\text { Machining } & 18,000 \
\text { Assembly } & 26,000
\end{array}$ Assuming use of the direct method, over how many square feet would the Building Maintenance cost be allocated (i.e., spread)?

Quizplus · Accepted Answer

The direct method allocates service department costs only to production departments. Therefore, Building Maintenance costs would be allocated over the square footage of Machining and Assembly, which is 18,000 + 26,000 = 44,000 square feet.

Martina, Inc Assuming Use of the Direct Method, Over How Many Square