Question

The Maryville Construction Company occupies 98,000 square feet for construction of mobile homes. There are two manufacturing departments, finishing and assembly, and four service departments labeled S1, S2, S3, and S4. Information relevant to Maryville is as follows:

		Allocation
Department	Area used	S1	S2	S3	S4	Finishing	Assembly
S1	18,000	---	0.20	0.20	---	0.20	0.40
S2	4,750	---	---	0.30	0.30	---	0.40
S3	9,500	0.10	0.10	---	0.40	0.10	0.30
S4	4,750	0.30	0.10	0.30	---	0.20	0.10
Finishing	27,450	---	---	---	---	---	---
Assembly	33,550	---	---	---	---	---	---

Rent paid for the area used is $730,000.

How much rent is allocable to the assembly department using the direct method of allocation?

Multiple Choice

• $401,500.

• $607,542.

• $328,500.

• $249,913.

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Answer 1

Option A is correct. Calculation: $ 40l,soo. Rent allo cable to the assembly department = Assembly Area used & (Finishing Area used & Assembly area used) x Rent paid for the area used - [33,550 + (27,450 + 33,550)]* $ 730,000 - [33, 550 = 61,000] x $ 730,000 - 0.55 * $ 730,000 = $401,500 So rent allocable to the assembly department urung the direct method of allocation is $ 401, 5oo.