The Following Is a Partially Completed Lower Section of a Departmental

question 193

Multiple Choice

The following is a partially completed lower section of a departmental expense allocation spreadsheet for Brickland. It reports the total amounts of direct and indirect expenses for the four departments. Purchasing department expenses are allocated to the operating departments on the basis of purchase orders. Maintenance department expenses are allocated based on square footage. Compute the amount of Purchasing department expense to be allocated to Fabrication. $\begin{array}{llcc}& \text { Purchasing } & \text { Maintenance} & \text { Fabncation } &\text { Assembly }\\ \text {Operating costs } &\$32,000&\$18,000&\$96,000&\$62,000\\ \text { No. of purchase orders } &&&16&4\\ \text { Sq. ft. of space } &&&3,300&2,700\\\end{array}$

• A) $6,400.
• B) $9,900.
• C) $8,100.
• D) $17,600.
• E) $25,600.

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Definitions:

Applied Overhead

The allocation of estimated overhead costs to specific products or job orders based on a predetermined rate or formula.

Manufacturing Overhead

Includes all the indirect costs associated with the production process, excluding direct materials and direct labor.

Assembly Division

A department or area within a manufacturing firm that is responsible for assembling the components of a product into a finished good.

Prorated

The allocation or division of amounts or costs proportionally according to a specific rate, size, or timeframe.