Exercise 22-5 Departmental expense allocations LO P2 Woh Che Co. has four depart
ID: 2522106 • Letter: E
Question
Exercise 22-5 Departmental expense allocations LO P2
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.
Use this information to allocate each of the three indirect expenses across the four departments.
Prepare a summary table that reports the indirect expenses assigned to each of the four departments
Indirect Expense Cost Allocation Base Supervision $ 82,800 Number of employees Utilities 53,000 Square feet occupied Insurance 24,000 Value of assets in use Total $ 159,800Explanation / Answer
Supervision Expenses Allocation Base percent of allocaion base cost to be allocated Allocated Cost Deaprtment No. of Employees Numerator Denominator % of Total material 28 28 140 20% 82,800 16,560 personnel 7 7 140 5% 82,800 4,140 manufacturing 63 63 140 45% 82,800 37,260 packaging 42 42 140 30% 82,800 24,840 total 140 100% 82,800 Utilities Allocation Base percent of allocaion base cost to be allocated Allocated Cost Deaprtment Square feet occupied Numerator Denominator % of Total material 39,000 39,000 130,000 30% 53,000 15,900 personnel 6,500 6,500 130,000 5% 53,000 2,650 manufacturing 65,000 65,000 130,000 50% 53,000 26,500 packaging 19,500 19,500 130,000 15% 53,000 7,950 total 130,000 100% 53,000 Insurance Allocation Base percent of allocaion base cost to be allocated Allocated Cost Deaprtment Value of assets in use Numerator Denominator % of Total material 12,600 12,600 63,000 20% 24,000 4,800 personnel 3,150 3,150 63,000 5% 24,000 1,200 manufacturing 31,500 31,500 63,000 50% 24,000 12,000 packaging 15,750 15,750 63,000 25% 24,000 6,000 total 63,000 100% 24,000 Supervision Utilities insurance Total Material 16,560 15,900 4,800 37,260 personnel 4,140 2,650 1,200 7,990 Manufacturing 37,260 26,500 12,000 75,760 packaging 24,840 7,950 6,000 38,790 Total 82,800 53,000 24,000
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