Question

PLEASE DO REQUIREMENT 1 & 2

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	$	83,300	Number of employees
Utilities		58,000	Square feet occupied
Insurance		26,500	Value of assets in use
Total	$	167,800

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

Department	Employees				Square Feet				Asset Values
Materials		38				54,000				$	6,800
Personnel		19				18,000					3,400
Manufacturing		76				81,000					37,400
Packaging		57				27,000					20,400
Total		190				180,000				$	68,000

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.

Answer 1

1.

Supervision	Allocation Base	% of Allocation Base	x Indirect Cost	Allocated Cost
Department	Number of Employees
Materials	38	20 %	83,300	16,660
Personnel	19	10 %	83,300	8,330
Manufacturing	76	40 %	83,300	33,320
Packaging	57	30 %	83,300	24,990
Totals	190	100 %		83,300
Utilities	Square Foot Occupied
Materials	54,000	30 %	58,000	17,400
Personnel	18,000	10 %	58,000	5,800
Manufacturing	81,000	45 %	58,000	26,100
Packaging	27,000	15 %	58,000	8,700
Totals	180,000	100 %		58,000
Insurance	Value of Assets
Materials	6,800	10 %	26,500	2,650
Personnel	3,400	5 %	26,500	1,325
Manufacturing	37,400	55 %	26,500	14,575
Packaging	20,400	30 %	26,500	7,950
Totals	68,000	100 %		26,500

2.

	Supervision	Utilities	Insurance	Totals
Materials	16,660	17,400	2,650	36,710
Personnel	8,330	5,800	1,325	15,455
Manufacturing	33,320	26,100	14,575	73,995
Packaging	24,990	8,700	7,950	41,640
Totals	$ 83,300	$ 58,000	$ 26,500	$ 167,800