Question

Mervon Company has two operating departments: Mixing and Bottling. Mixing has 350 employees and Bottling has 350 employees. Indirect factory costs include administrative costs of $162,000. Administrative costs are allocated to operating departments based on the number of workers. Determine the administrative costs allocated to each operating department.

Answer 1

Allocated administrative cost for mixing is $81000

And allocated administrative cost for for bottling is $81000

Step-by-step explanation:

We have given total number of employs for mixing = 350

And total number of employs for bottling = 350

Administrative cost = $162000

So total number of employs = 350+350 = 700

So allocation base for mixing
`=(350)/(700)=0.5`

So allocated amount for mixing = 0.5×$162000 = $81000

Allocation base for bottling =
`=(350)/(700)=0.5`

So allocated amount for bottling = 0.5×$162000 = $81000