Accounting 2 Help please: Advertising and purchasing department expenses of Cozy

Question

Accounting 2 Help please: Advertising and purchasing department expenses of Cozy Bookstore are allocated to operating departments on the basis of dollar sales and purchase orders, respectively. The purchasing department had total expenses of $27,100 and the advertising department had total expenses of $47,500. Information about the allocation bases for the three operating departments follows.

Department Books Magazines Newspapers Sales Purchase Orders 880 660 660 $166,600 78,200 95,200 Total $ 340,000 2,200 Complete the following table by allocating the expenses of the two service departments (advertising and purchasing) to the three operating departments (see the expenses below). Advertising Allocation Base Percent of Allocation Base Cost to be allocated Allocated Cost Department Numerator Denominator % of Total Books Dept Magazines Dept Newspapers Dept Totals Purchasing Allocation Base Percent of Allocation Base Cost to be allocated Allocated Cost Department Numerator Denominator % of Total Books Dept Magazines Dept Newspapers Dept Totals

Explanation / Answer

Advertising Allocation Base Department Numerator Denominator % Of total Base Cost to be allocated Allocated Cost Books Department Sales 166600 340000 0.49 47500 23275 Magazines Department Sales 78200 340000 0.23 47500 10925 Newspapers Department Sales 95200 340000 0.28 47500 13300 Purchasing Allocation Base Department Numerator Denominator % Of total Base Cost to be allocated Allocated Cost Books Department Purchase Orders 880 2200 0.4 27100 10840 Magazines Department Purchase Orders 660 2200 0.3 27100 8130 Newspapers Department Purchase Orders 660 2200 0.3 27100 8130

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