Question

3. A granary allocates the cost of unprocessed wheat to the production of feed, flour, and starch. For the current period, unprocessed wheat was purchased for $230,000, and the following quantities of product and sales revenues were produced.

Product	Pounds		Price per Pound
Feed	116,250			$	0.80
Flour	77,500				2.20
Starch	31,000				1.50

How much of the $230,000 cost should be allocated to flour if the value basis is used?

6.

Canfield Technical School allocates administrative costs to its respective departments based on the number of students enrolled, while maintenance and utilities are allocated per square feet of the classrooms. Based on the information below, what is the total amount allocated to the Welding Department (rounded to the nearest dollar) if administrative costs for the school were $66,000, maintenance fees were $28,000, and utilities were $7,600?

Department	Students			Classrooms
Electrical	100			15,600		sq. ft.
Welding	75			20,800		sq. ft.
Accounting	50			10,400		sq. ft.
Carpentry	25			5,200		sq. ft.
Total	250			52,000		sq. ft.

Answer 1

Answer:

3)

Total cost         =    (116,250 x $0.80 ) + (77,500 x $2.20) +(31,000 x $1.50)         =       $93,000 + $170,500 + $46,500         =       $310,000

Amount of cost allocated to flour                  = $170,500 / $310,000 x $230,000                  =   $126,500

Amount of cost allocated to flour   = $126,500

6)

Total amount allocated to the Welding department       = (Administration costs x Utilisation Ratio)                    + (Maintenance fee x Utilisation Ratio)                     + (Utilities x Utilisation Ratio)       =   ( $66,000 x 75 / 250) + ($ 28,000 x 20,800 / 52,000 )                                                       + ($ 7,600 x 20,800 / 52,000 )       =      $19,800 + $11,200 + $3,040       =      $34,040

Total amount allocated to the Welding department = $34,040