A company has two departments, Y and Z that incur delivery expenses. An analysis

Question

A company has two departments, Y and Z that incur delivery expenses. An analysis of the total delivery expense of $12,000 indicates that Dept. Y had a direct expense of $1,300 for deliveries and Dept. Z had no direct expense. The indirect expenses are $10,700. The analysis also indicates that 60% of regular delivery requests originate in Dept. Y and 40% originate in Dept. Z. Departmental delivery expenses for Dept. Y and Dept. Z, respectively, are: $6,000; $6,000. $7,330; $6,000. $7,330; $4,670. $7,200; $4,800. $7,720; $4,280.

Explanation / Answer

$7,720; $4,280

Working:

a. Assignment of indirect expense to each department Indirect Expense of : Department Y $       10,700 x 60% = $    6,420 Department Z $       10,700 x 40% = $    4,280 b. Assignment of total delivery expense to each department Department Y Department Z Drect Expense $       1,300 0 Indirect Expense $       6,420 $    4,280 Total Delivery Expense $       7,720 $    4,280 Thus, Departmental delivery expenses for Dept. Y and Dept. Z, respectively, are $    7,720 ; $    4,280

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