Woh Che Co. has four departments: materials, personnel, manufacturing, and packa

Question

Woh Che Co. has four departments: materials, personnel, manufacturing, and packaging. In a recent month, the four departments incurred three shared indirect expenses. The amounts of these indirect expenses and the bases used to allocate them follow.

Departmental data for the company’s recent reporting period follow.

1. Use this information to allocate each of the three indirect expenses across the four departments.
2. Prepare a summary table that reports the indirect expenses assigned to each of the four departments.

Indirect Expense Cost Allocation Base Supervision $ 82,500 Number of employees Utilities 50,000 Square feet occupied Insurance 22,500 Value of assets in use Total $ 155,000

Departmental data for the company’s recent reporting period follow.

Department Employees Square Feet Asset Values Materials 27 25,000 $ 6,000 Personnel 9 5,000 1,200 Manufacturing 63 55,000 37,800 Packaging 51 15,000 15,000 Total 150 100,000 $ 60,000

1. Use this information to allocate each of the three indirect expenses across the four departments.
2. Prepare a summary table that reports the indirect expenses assigned to each of the four departments.

Supervision expenses Allocation Base Percent of Allocation Base Cost to be Allocated Allocated Cost Department Number of employees Numerator Denominator % of Total Materials 0 Personnel 0 Manufacturing 0 0 Packaging 0 Totals 0 Utilities Allocation Base Percent of Allocation Base Cost to be Allocated Allocated Cost Department Numerator Denominator % of Total Materials 0 Personnel 0 Manufacturing 0 0 Packaging 0 Totals 0 Insurance Allocation Base Percent of Allocation Base Cost to be Allocated Allocated Cost Department Numerator Denominator % of Total Materials 0 Personnel 0 Manufacturing 0 0 Packaging 0 Totals 0

Explanation / Answer

Solution 1:

Solution 2:

Supervision Expenses Allocation Base Percentage of allocation base Cost to be allocated Allocated cost Numerator Denominator % of Total Materials Number of employees 27 150 18.00% $82,500.00 $14,850.00 Personnel Number of employees 9 150 6.00% $82,500.00 $4,950.00 Manufacturing Number of employees 63 150 42.00% $82,500.00 $34,650.00 Packaging Number of employees 51 150 34.00% $82,500.00 $28,050.00 Total 100.00% $82,500.00

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