Ice House Industries, Inc -Based on the Above Data, Determine the Administrative Cost Allocated

question 4

Multiple Choice

Ice House Industries, Inc. has three operating departments: Cooking, Churning and Freezing. Indirect factory costs for the current period were Administrative, $560,000 and Maintenance, $98,000. Administrative costs are allocated to operating departments based on the number of workers and maintenance costs are allocated to operating departments based on square footage occupied.
$\begin{array}{|l|c|c|c|}\hline & \begin{array}{c}\text { Cooking } \\\text { Department }\end{array} & \begin{array}{c}\text { Churning } \\\text { Department }\end{array} & \begin{array}{c}\text { Freezing } \\\text { Department }\end{array} \\\hline \begin{array}{r}\text { Number of } \\\text { employees }\end{array} & \begin{array}{r}2,940 \\\text { employees }\end{array} & 4,900 \text { employees } & 1,960 \text { employees } \\\hline \text { Square feet occupied } & 33,250 \mathrm{Sq} . \mathrm{Ft} . & 38,000 \mathrm{Sq} . \mathrm{Ft} & 23,750 \mathrm{Sq} . \mathrm{Ft} . \\\hline\end{array}$
-Based on the above data, determine the administrative cost allocated to each operating department of Ice House Industries, Inc.
(A) $\text { Cooking: } \$ 168,000 \quad \text { Churning: \$280,000} \quad \text { Freezing: } \$ 112,000$
(B) $\text { Cooking: } \$ 186,666 \quad \text { Churning: \$186,666 } \quad \text { Freezing: } \$ 186,666$
(C) $\text { Cooking: } \$ 112,000 \quad \text { Churning: \$280,000 } \quad \text { Freezing: } \$ 168,000$
(D) $\text { Cooking: } \$ 280,000 \quad \text { Churning: \$112,000 } \quad \text { Freezing: } \$ 168,000$
(E) $\text { Cooking: } \$ 219,333 \quad \text { Churning: \$219,333 } \quad \text { Freezing: } \$ 219,333$

• A) A Above.
• B) B Above.
• C) C Above.
• D) D Above.
• E) E Above.

Understand the role of the predetermined overhead rate in costing and decision-making processes.

Interpret financial outcomes related to manufacturing activities, including net operating income and the cost of goods available for sale.

Understand how to calculate the amount of direct material purchased during the year.

Identify and calculate the ending balance in the Raw Materials inventory account.

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