Chapter 4, Problem 6P

Menlo Materials is divided into five departments, Mixing, Blending, Finishing, Factory Office, and Building Maintenance. The first three departments are engaged in production work. Factory Office and Building Maintenance are service departments. During the month of June, the following factory overhead was incurred for the departments:

The bases for distributing service department expenses to the other departments follow:

Building Maintenance–On the basis of floor space occupied by the other departments as follows: Mixing. 10,000 sq ft; Blending. 4,500 sq ft; Finishing, 10,500 sq ft; and Factory Office. 7,000 sq ft.

Factory Office–On the basis of number of employees as follows: Mixing, 30; Blending, 20; and Finishing, 50.

Required:

Prepare a schedule showing the distribution of the service departments’ expenses using the direct distribution method.