Advertising department expenses of $24,000 and purchasing department expenses of

Q: Advertising department expenses of $24,000 and purchasing department expenses of

Solution: Advertising Allocation base Percent of allocation base Cost to be allocated Allocated Cost Numerator Denominator % of total Department: Books Deptt Dollar Sales $495,000.00 $900,000.00 55% $24,000.00 $13,200.00 Magzine Deptt Dollar Sales $198,000.00 $900,000.00 22% $24,000.00 $5,280.00 Newspaper Deptt Dollar Sales $207,000.00 $900,000.00 23% $24,000.00 $5,520.00

ID: 2528684 • Letter: A

Question

Advertising department expenses of $24,000 and purchasing department expenses of $34,000 of Cozy Bookstore are allocated to operating departments on the basis of dollar sales and purchase orders, respectively. Information about the allocation bases for the three operating departments follows. Sales $495,000 198,000 207,000 $900,000 Purchase Orders Department Books Magazines Newspapers Total 516 360 324 1,200 Complete the following table by allocating the expenses of the two service departments (advertising and purchasing) to the three operating departments.

Explanation / Answer

Solution:

Advertising Allocation base Percent of allocation base Cost to be allocated Allocated Cost Numerator Denominator % of total Department: Books Deptt Dollar Sales $495,000.00 $900,000.00 55% $24,000.00 $13,200.00 Magzine Deptt Dollar Sales $198,000.00 $900,000.00 22% $24,000.00 $5,280.00 Newspaper Deptt Dollar Sales $207,000.00 $900,000.00 23% $24,000.00 $5,520.00

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Advertising department expenses of $24,000 and purchasing department expenses of

Advertising department expenses of $25,000 and purchasing department expenses of

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Advertising department expenses of $24,000 and purchasing department expenses of

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