Melvin Corporation allocates overhead to all departments bas

Melvin Corporation allocates overhead to all departments based on the square footage occupied by each department. The shoe department occupies 3,000 square feet, the toy department 6,000 square feet, the dress department 7,000 square feet. Total overhead to be allocated is $64,000. what is the amount allocated to the dress department?

Solution

Overhead is directly proportional to the square footage occupied by each department

Let the shoe department allocated 3000x

then toy deparment will get 6000x and dress department will get 7000x

(3000x + 6000x + 7000x ) = $64,000

16000x = $64,000

x = 4$

Hence the amount allocated to dress department = 7000x = 7000 * 4 = $28,000