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Woh Che Co. has four departments: materials, personnel, manufacturing, and packaging. In a recent month, the...

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 Indirect Expense Cost Allocation Base Supervision $ 84,500 Number of employees Utilities 70,000 Square feet occupied Insurance 32,500 Value of assets in use Total $ 187,000 Departmental data for the company’s recent reporting period follow Department Employees Square Feet Asset Values Materials 40 39,000 $ 12,000 Personnel 10 19,500 1,600 Manufacturing 84 107,250 47,200 Packaging 66 29,250 19,200 Total 200 195,000 $ 80,000 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.

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Expert Solution

1
Supervision expenses Allocation Base Percent of Allocation Base Cost to be allocated Allocated Cost
Department Number of employees Numerator Denominator % of Total
Materials 40 40 200 20% 84500 16900
Personnel 10 10 200 5% 84500 4225
Manufacturing 84 84 200 42% 84500 35490
Packaging 66 66 200 33% 84500 27885
Totals 200 100% 84500
Utilities Allocation Base Percent of Allocation Base Cost to be allocated Allocated Cost
Department Square feet occupied Numerator Denominator % of Total
Materials 39000 39000 195000 20% 70000 14000
Personnel 19500 19500 195000 10% 70000 7000
Manufacturing 107250 107250 195000 55% 70000 38500
Packaging 29250 29250 195000 15% 70000 10500
Totals 195000 100% 70000
Insurance Allocation Base Percent of Allocation Base Cost to be allocated Allocated Cost
Department Value of assets in use Numerator Denominator % of Total
Materials 12000 12000 80000 15% 32500 4875
Personnel 1600 1600 80000 2% 32500 650
Manufacturing 47200 47200 80000 59% 32500 19175
Packaging 19200 19200 80000 24% 32500 7800
Totals 80000 100% 32500
2
Supervision Utilities Insurance Total
Materials 16900 14000 4875 35775
Personnel 4225 7000 650 11875
Manufacturing 35490 38500 19175 93165
Packaging 27885 10500 7800 46185
Totals 84500 70000 32500 187000

ekkarill92 answered 6 months ago
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