Texas Toys, a retail store, has four sales departments supported by three servic

Question

Texas Toys, a retail store, has four sales departments supported by three service departments. Cost and operational data for each department follow: Purch. Sales Cost of Square Orders Department Sales Goods Sold Footage Issued 1 $92,160 $36,864 1,728 1,260 2 69,120 32,832 3,024 1,680 3 80,640 32,256 1,296 2,310 4 46,080 27,648 2,592 1,750 Service Departments Allocation Basis Cost Advertising……….. Sales $10,000 Maintenance……… Square footage 6,900 Purchasing………... No. of purchase orders issued 12,000

Determine the service department expenses to be allocated to Sales Departments 1 - 4 for: Advertising Maintenance Purchasing

Explanation / Answer

Solution:

(A). Service Dept Overhead Allocation Process:

ServiceDept:

   Dept -1 Dept -2 Dept -3 Dept -4

1 92,160 36,864 1,728 1,260

2 69,120 32,832 3,024 1,680

3 80,640 32,256 1,296 2,310

4 46,080 27,648 2,592 1,750

Sales = $ 10,000

Square Footage = $ 6,900

No.of Purchased Orders Issued = 12,000

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