Question

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	$	83,700	Number of employees
Utilities		62,000	Square feet occupied
Insurance		28,500	Value of assets in use
Total	$	174,200

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

Department	Employees				Square Feet				Asset Values
Materials		24				28,750				$	7,200
Personnel		12				11,500					2,880
Manufacturing		48				57,500					37,440
Packaging		36				17,250					24,480
Total		120				115,000				$	72,000

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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• Required 1
• Required 2

Prepare a summary table that reports the indirect expenses assigned to each of the four departments.

	Supervision Utilities Insurance Total Materials $0 Personnel 0 Manufacturing 0 Packaging 0 Totals $0 $0 $0 $0

Complete this question by entering your answers in the tabs below.

• Required 1
• Required 2

Use this information to allocate each of the three indirect expenses across the four departments.

Supervision expenses Allocation Base Percent of Allocation Base Cost to be Allocated Allocated Cost Department Numerator Denominator % of Total Materials 0 Personnel 0 Manufacturing 0 0 Packaging 0 0 Totals 0 Utilities Allocation Base Percent of Allocation Base Cost to be Allocated Allocated Cost Department Numerator Denominator % of Total Materials 0 Personnel 0 Manufacturing 0 0 Packaging 0 0 Totals 0 Insurance Allocation Base Percent of Allocation Base Cost to be Allocated Allocated Cost Department Numerator Denominator % of Total Materials 0 Personnel 0 Manufacturing 0 0 Packaging 0 0 Totals 0

Answer 1

1) Allocation of Indirect expenses is shown as follows:-

a) Supervision Expenses

Department	Allocation Base	Percent of Allocation Base (A)	Cost to be Allocated (B)	Allocated Cost (C = A*B)
Materials	24	20% (24/120*100)	83,700	16,740
Personnel	12	10% (12/120*100)	83,700	8,370
Manufacturing	36	30% (36/120*100)	83,700	25,110
Packaging	48	40% (48/120*100)	83,700	33,480
Total	120	100%		83,700

b) Utilities Expenses

Department	Allocation Base	Percent of Allocation Base (A)	Cost to be Allocated (B)	Allocated Cost (C = A*B)
Materials	28,750	25% (28,750/115,000*100)	62,000	15,500
Personnel	11,500	10% (11,500/115,000*100)	62,000	6,200
Manufacturing	57,500	50% (57,500/115,000*100)	62,000	31,000
Packaging	17,250	15% (17,250/115,000*100)	62,000	9,300
Total	115,000	100%		62,000

c) Insurance Expense

Department	Allocation Base	Percent of Allocation Base (A)	Cost to be Allocated (B)	Allocated Cost (C = A*B)
Materials	7,200	10% (7,200/72,000*100)	28,500	2,850
Personnel	2,880	4% (2,880/72,000*100)	28,500	1,140
Manufacturing	37,440	52% (37,440/72,000*100)	28,500	14,820
Packaging	24,480	34% (24,480/72,000*100)	28,500	9,690
Total	72,000	100%		28,500

2) Summary Table showing Assigning of Indirect Expenses (Amounts in $)

Department	Supervisions	Utilities	Insurance	Total
Materials	16,740	15,500	2,850	35,090
Personnel	8,370	6,200	1,140	15,710
Manufacturing	25,110	31,000	14,820	70,930
Packaging	33,480	9,300	9,690	52,470
Total	83,700	62,000	28,500	174,200