In: Accounting
Exercise 9-5 Departmental expense allocations LO P2
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 | $ | 84,100 | Number of employees |
Utilities | 66,000 | Square feet occupied | |
Insurance | 30,500 | Value of assets in use | |
Total | $ | 180,600 | |
Departmental data for the company’s recent reporting period
follow.
Department | Employees | Square Feet | Asset Values | |||||||||
Materials | 40 | 31,000 | $ | 7,600 | ||||||||
Personnel | 8 | 15,500 | 2,280 | |||||||||
Manufacturing | 64 | 77,500 | 50,160 | |||||||||
Packaging | 48 | 31,000 | 15,960 | |||||||||
Total | 160 | 155,000 | $ | 76,000 | ||||||||
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.