Exercise 9-3 Service department expenses allocated to operating departments LO P

Question

Exercise 9-3 Service department expenses allocated to operating departments LO P2 Advertsing department expenses of $57800 and purchasing department expenses of $57800 of Cozy Bookstore are allocated to 10 points operating departments on the basis of dollar sales and purchase orders, respectively Information about the three operating departments follows. allocation bases for the Book $184,900 107, 500 137, 600 $430, 000 816 476 408 1,700 Hint Newspapers Print Tot1 Complete the following table by allocating the expenses of the two service departments (advertising and purchasing) to the three operating departments. Complete this question by entering your answers in the tabs below. Allocation of Alloc of Serv Exp Dept Complete the following table by allocating the expenses of the two service departments (advertising and purchasing) to the three operating departments Allocation Base Cost to be Allocated Allocated Cost sing Department Numerator Denominator % of Total Books Magazines Mc Graw Prev 1of 1= Next

Explanation / Answer

Exercise 9-3

Advertsing

Allocation Base

Percent of Allocation Base

Costs to be allocated

Allocated cost

Sales

Numerator

Denominator

% of total

Books Dept

184900

184900

430000

43%

57800

24854

Magazine dept

107500

107500

430000

25%

57800

14450

Newspaper dept

137600

137600

430000

32%

57800

18496

430000

Purchasing

Allocation Base

Percent of Allocation Base

Costs to be allocated

Allocated cost

Sales

Numerator

Denominator

% of total

Books Dept

816

816

1700

48%

57800

27744

Magazine dept

476

476

1700

28%

57800

16184

Newspaper dept

408

408

1700

24%

57800

13872

1700

Exercise 9-5

Supervison expense

Allocation Base

Percent of Allocation Base

% of total

Indirect cost

Allocated cost

Materials

27

27

150

18%

84000

15120

Personnel

9

9

150

6%

84000

5040

Manufacturing

60

60

150

40%

84000

33600

Packaging

54

54

150

36%

84000

30240

150

Utilities

Allocation Base

Percent of Allocation Base

% of total

Indirect cost

Allocated cost

Materials

58000

58000

145000

40%

65000

26000

Personnel

7250

7250

145000

5%

65000

3250

Manufacturing

65250

65250

145000

45%

65000

29250

Packaging

14500

14500

145000

10%

65000

6500

145000

Insurance

Allocation Base

Percent of Allocation Base

% of total

Indirect cost

Allocated cost

Materials

7500

7500

75000

10%

30000

3000

Personnel

1500

1500

75000

2%

30000

600

Manufacturing

48750

48750

75000

65%

30000

19500

Packaging

17250

17250

75000

23%

30000

6900

75000

Exercise 9-3

Advertsing

Allocation Base

Percent of Allocation Base

Costs to be allocated

Allocated cost

Sales

Numerator

Denominator

% of total

Books Dept

184900

184900

430000

43%

57800

24854

Magazine dept

107500

107500

430000

25%

57800

14450

Newspaper dept

137600

137600

430000

32%

57800

18496

430000

Purchasing

Allocation Base

Percent of Allocation Base

Costs to be allocated

Allocated cost

Sales

Numerator

Denominator

% of total

Books Dept

816

816

1700

48%

57800

27744

Magazine dept

476

476

1700

28%

57800

16184

Newspaper dept

408

408

1700

24%

57800

13872

1700

Exercise 9-5

Supervison expense

Allocation Base

Percent of Allocation Base

% of total

Indirect cost

Allocated cost

Materials

27

27

150

18%

84000

15120

Personnel

9

9

150

6%

84000

5040

Manufacturing

60

60

150

40%

84000

33600

Packaging

54

54

150

36%

84000

30240

150

Utilities

Allocation Base

Percent of Allocation Base

% of total

Indirect cost

Allocated cost

Materials

58000

58000

145000

40%

65000

26000

Personnel

7250

7250

145000

5%

65000

3250

Manufacturing

65250

65250

145000

45%

65000

29250

Packaging

14500

14500

145000

10%

65000

6500

145000

Insurance

Allocation Base

Percent of Allocation Base

% of total

Indirect cost

Allocated cost

Materials

7500

7500

75000

10%

30000

3000

Personnel

1500

1500

75000

2%

30000

600

Manufacturing

48750

48750

75000

65%

30000

19500

Packaging

17250

17250

75000

23%

30000

6900

75000

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