1. Advertising department expenses of $54,100 and purchasing department expenses
ID: 2578487 • Letter: 1
Question
1. Advertising department expenses of $54,100 and purchasing department expenses of $33,800 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.
Complete the following table by allocating the expenses of the two service departments (advertising and purchasing) to the three operating departments.
Complete the spreadsheet by allocating the expenses of the two service departments (advertising and purchasing) to the three operating departments. (Amounts to be deducted should be indicated with minus sign.)
Department Sales Purchase Orders Books $ 143,500 1,440 Magazines 70,000 756 Newspapers 136,500 1,404 Total $ 350,000 3,600Explanation / Answer
Advertising Allocation Base Percent of Allocation Base Cost to be Allocated Allocated Cost Department Sales Numerator Denominator % of Total Books Dept 143500 143500 350000 41% 54100 22181 Magazines Dept 70,000 70000 350000 20% 54100 10820 Newspapers Dept 1,36,500 136500 350000 39% 54100 21099 Totals 350000 100% 54100 Purchasing Allocation Base Percent of Allocation Base Cost to be Allocated Allocated Cost Department Number of orders Numerator Denominator % of Total Books Dept 1440 1440 3600 40% 33800 13520 Magazines Dept 756 756 3600 21% 33800 7098 Newspapers Dept 1,404 1404 3600 39% 33800 13182 Totals 3600 100% 33800 Allocation of Expenses to Departments Allocation Base Expense Account Balance Advertising Dept. Purchasing Dept. Books Dept. Magazines Dept. Newspapers Dept. Total department expenses 676000 54100 33800 175800 135200 277100 Service Dept. Expenses : Advertising Dept. 0 -54,100 22181 10,820 21,099 Purchasing Dept. 0 -33,800 13,520 7,098 13,182 Total expenses allocated to operating depts. 676000 0 0 211501 153118 311381
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