Bricks and Mortar Manufacturing produces building materials for local construction contractors. BMM has two production departments (Mixing and Baking) and two service departments (Maintenance and Cleaning). Maintenance costs are allocated based on machine hours used. Cleaning costs are allocated based on square feet of floor space. The following data is available for BMM:

Mixing:
600 square feet of floor space,

200 machine hours used

Baking:
450 square feet of floor space,

500 machine hours used

Maintenance costs incurred: $4,900
Cleaning costs incurred: $2,300
How much of the Cleaning costs should be allocated to the Baking department?

Cleaning costs of baking department = $986 (Approx)

Explanation:

Given:

Mixing: department = 600 square feet of floor  

Mixing: department = 200 machine hours used

Baking department = 450 square feet of floor

Baking department = 500 machine hours used

Maintenance costs = $4,900

Cleaning costs = $2,300

Find:

Cleaning costs of baking department

Computation:

Cleaning costs of baking department = [Baking department area / Total area]Cleaning costs

Cleaning costs of baking department = [450 / (450 + 600)]2,300

Cleaning costs of baking department = [0.4286]2,300

Cleaning costs of baking department = 985.78

Cleaning costs of baking department = $986 (Approx)

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