Question

Advertising department expenses of $26,700 and purchasing department expenses of $46,700 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.

Department	Sales			Purchase Orders
Books	$	180,400			1,290
Magazines		123,000			690
Newspapers		106,600			1,020
Total	$	410,000			3,000

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.)

	Advertising Allocation Base Percent of Allocation Base Cost to be Allocated Allocated Cost Department Numerator Denominator % of Total Books Magazines Newspapers Totals Purchasing Allocation Base Percent of Allocation Base Cost to be Allocated Allocated Cost Department Numerator Denominator % of Total Books Magazines Newspapers Totals

	COZY BOOKSTORE Departmental Expense Allocation Spreadsheet Expense Totals Advertising Purchasing Books Magazines Newspapers Total department expenses $667,000 $26,700 $46,700 $140,100 $133,400 $320,100 Service Dept. Expenses Advertising Dept. Purchasing Dept. Total expenses allocated $667,000

• Allocation of Exp

Answer 1

Advertising	Allocation Base	Percent of Allocation Base	Cost to be Allocated($)	Allocated Cost($)
Department	sales	Numerator	Denominator	% of Total	26700
Books Dept	180,400	180,400	410,000	44		11748
Magazines Dept	123,000	123,000	410,000	30		8010
Newspapers Dept	106,600	106,600	410,000	26		6942
Totals	410,000	410,000		100		26700

Advertising	Allocation Base	Percent of Allocation Base	Cost to be Allocated($)	Allocated Cost($)
Department	purchase order	Numerator	Denominator	% of Total	46700
Books Dept	1,290	1,290	3,000	43		20081
Magazines Dept	690	690	3,000	23		10741
Newspapers Dept	1,020	1,020	3,000	34		15878
Totals	3,000	3,000		100		46700

Allocation of Expenses to Departments
Allocation Base	Expense Account Balance	Advertising Dept.	Purchasing Dept.	Books Dept.	Magazines Dept.	Dept.Newspapers Dept.
Total department expenses	$667,000	$26,700	$46,700	$140,100	$133,400	$320,100
Advertising Dept. Sales		($26,700)		11748	8010	6942
Purchasing Dept. Purch. orders			($46,700)	20081	10741	15878
Total expenses allocated to operating depts.	$667,000	$0	$0	$171,929	$152,151	$342,920