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In: Accounting

Brownley Company has two service departments and two operating (production) departments. The Payroll Department services all...

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:

Service Depts. Production Depts.
Payroll Maintenance Milling Assembly
Direct costs $ 24,200 $ 35,000 $ 95,500 $ 143,400
No. of personnel 34 34 102
Sq. ft. of space 13,800 18,800


The total cost of operating the Milling Department for the current period is (Do not round your intermediate calculations):

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Expert Solution

Answer

The total cost of operating the Milling Department for the current period is $ 117,204.79.

Calculations:

Payroll Maintainence Milling Assembly
Direct costs $         24,200.00 $         35,000.00 $         95,500.00 $      143,400.00
Payroll $       (24,200.00) $           4,840.00 $           4,840.00 $         14,520.00
Total $                       -   $         39,840.00 $      100,340.00 $      157,920.00
Maintainence $       (39,840.00) $         16,864.79 $         22,975.21
Total $                       -   $                       -   $      117,204.79 $      180,895.21

Formulae:

Payroll Maintenance Milling Assembly
Direct costs 24200 35000 95500 143400
Payroll -24200 =24200/170*34 =24200/170*34 =24200/170*102
Maintenance -39840 =39840/32600*13800 =39840/32600*18800

In case of any doubt, please comment.

ekkarill92 answered 1 year ago
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