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

Indirect Expense		Cost	Allocation Base
Supervision	$	83,600	Number of employees
Utilities		61,000	Square feet occupied
Insurance		28,000	Value of assets in use
Total	$	172,600

Departmental data for the company’s recent reporting period follow.

Department	Employees		Square Feet		Asset Values
Materials		22		21,000		$	17,750
Personnel		11		5,250			2,130
Manufacturing		44		68,250			36,210
Packaging		33		10,500			14,910
Total		110		105,000		$	71,000

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.

Solutions

Expert Solution

Supervision expenses	Allocation Base	Percent of Allocation Base			x Indirect Cost	Allocated Cost
Department	Number of employees	Numerator	Denominator	% of Total
Materials	22	22	110	20%	83600	16720
Personnel	11	11	110	10%	83600	8360
Manufacturing	44	44	110	40%	83600	33440
Packaging	33	33	110	30%	83600	25080
Totals	110			100%		83600

Utilities	Allocation Base	Percent of Allocation Base			x Indirect Cost	Allocated Cost
Department	Square feet occupied	Numerator	Denominator	% of Total
Materials	21000	21000	105000	20%	61000	12200
Personnel	5250	5250	105000	5%	61000	3050
Manufacturing	68250	68250	105000	65%	61000	39650
Packaging	10500	10500	105000	10%	61000	6100
Totals	105000			100%		61000

Insurance	Allocation Base	Percent of Allocation Base			x Indirect Cost	Allocated Cost
Department	Value of assets in use	Numerator	Denominator	% of Total
Materials	17750	17750	71000	25%	28000	7000
Personnel	2130	2130	71000	3%	28000	840
Manufacturing	36210	36210	71000	51%	28000	14280
Packaging	14910	14910	71000	21%	28000	5880
Totals	71000			100%		28000


2
	Supervision	Utilities	Insurance	Total
Materials	16,720	12,200	7000	35,920
Personnel	8,360	3,050	840	12,250
Manufacturing	33,440	39,650	14,280	87,370
Packaging	25,080	6,100	5,880	37,060
Totals	83,600	61,000	28000	172,600

ekkarill92 answered 2 years ago

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