Advertising department expenses of $48,200 and purchasing department expenses of
ID: 2533622 • Letter: A
Question
Advertising department expenses of $48,200 and purchasing department expenses of $40,200 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. Purchase Orders Sales $167,700 Department Books Magazines Newspapers Total 1,232 756 812 2,800 89,700 132,600 $390,000 Complete the following table by allocating the expenses of the two service departments (advertising and purchasing) to the three operating departments.Explanation / Answer
Answers
Advertising
Allocation Base
Numerator
Denominator
% of total
Costs to be allocated
Allocated Cost
Departments:
Books
Sales dollars
$167700
$390000
43%
$ 48,200.00
$ 20,726.00
Magazines
Sales dollars
$89700
$390000
23%
$ 48,200.00
$ 11,086.00
Newspapers
Sales dollars
$132600
$390000
34%
$ 48,200.00
$ 16,388.00
Totals
$390000
$390000
100%
$ 48,200.00
$ 48,200.00
Purchasing
Allocation Base
Numerator
Denominator
% of total
Costs to be allocated
Allocated Cost
Departments:
Books
Purchase orders
1232
2800
44%
$ 40,200.00
$ 17,688.00
Magazines
Purchase orders
756
2800
27%
$ 40,200.00
$ 10,854.00
Newspapers
Purchase orders
812
2800
29%
$ 40,200.00
$ 11,658.00
Totals
2800
2800
100%
$ 40,200.00
$ 40,200.00
Expenses totals
Advertising
Purchasing
Books
Magazines
Newspapers
Total departmental expenses
$ 8,03,000.00
$ 48,200.00
$ 40,200.00
$ 2,08,800.00
$ 1,60,600.00
$ 3,45,200.00
Service Dept expense
Advertising Dept
$ -
$ (48,200.00)
$ 20,726.00
$ 11,086.00
$ 16,388.00
Purchasing Dept
$ -
$ (40,200.00)
$ 17,688.00
$ 10,854.00
$ 11,658.00
Total expenses allocated
$ 8,03,000.00
$ -
$ -
$ 2,47,214.00
$ 1,82,540.00
$ 3,73,246.00
Advertising
Allocation Base
Numerator
Denominator
% of total
Costs to be allocated
Allocated Cost
Departments:
Books
Sales dollars
$167700
$390000
43%
$ 48,200.00
$ 20,726.00
Magazines
Sales dollars
$89700
$390000
23%
$ 48,200.00
$ 11,086.00
Newspapers
Sales dollars
$132600
$390000
34%
$ 48,200.00
$ 16,388.00
Totals
$390000
$390000
100%
$ 48,200.00
$ 48,200.00
Purchasing
Allocation Base
Numerator
Denominator
% of total
Costs to be allocated
Allocated Cost
Departments:
Books
Purchase orders
1232
2800
44%
$ 40,200.00
$ 17,688.00
Magazines
Purchase orders
756
2800
27%
$ 40,200.00
$ 10,854.00
Newspapers
Purchase orders
812
2800
29%
$ 40,200.00
$ 11,658.00
Totals
2800
2800
100%
$ 40,200.00
$ 40,200.00
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