Question

In: Accounting

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

Won Han 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 $ 74,000 Number of employees
  Utilities 59,000 Square feet occupied
  Insurance 16,900 Value of assets in use
  
  Total $ 149,900
  

    

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

    

Department Employees Square Feet Asset Values
  Materials 17 28,000 $ 82,000
  Personnel 4 4,600 1,100
  Manufacturing 64 41,000 38,300
  Packaging 29 13,600 15,500
  
  Total 114 87,200 $ 136,900
  

   

(1)

Use this information to allocate each of the three indirect expenses across the four departments. (Round your intermediate and final answers to the nearest whole dollar. Omit the "$" & "%" signs in your response.)

   

  Supervision expenses
Department % of Total      Cost
  Materials % $   
  Personnel         
  Manufacturing         
  Packaging         
  
  Totals % $   
  

   

  Utilities expenses
Department % of Total      Cost
  Materials % $   
  Personnel         
  Manufacturing         
  Packaging         
  
  Totals % $   
  

   

  Insurance expenses
Department % of Total      Cost
  Materials % $   
  Personnel         
  Manufacturing         
  Packaging         
  
  Totals % $   
  

  

(2)

Prepare a summary table that reports the indirect expenses assigned to each of the four departments. (Round your intermediate and final answers to the nearest whole dollar. Omit the "$" sign in your response.)

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

Solutions

Expert Solution

Ans.1
1 Supervision Expenses:
Number of percentage of Indirect Allocated
Department (a) employees (b) employees in total © cost (d) Cost (c*d)
Materials 17 17/114 * 100   = 14.91% 74000 11033
Personnel 4 4/114*100       =   3.51% 74000 2597
Manufacturing 64 64/114*100     = 56.14% 74000 41544
Packaging 29 29/114*100     = 25.44% 74000 18826
Total 114 100% 74000
2 Utilities:
Sqare feet percentage of Indirect Allocated
Department (a) occupied (b) sq. feet in total © cost (d) Cost (c*d)
Materials 28000 28000/87200 * 100 = 32.1% 59000 18939
Personnel 4600 4600/87200 * 100    = 5.3% 59000 3127
Manufacturing 41000 41000/87200 * 100 = 47% 59000 27730
Packaging 13600 13600/87200 * 100 = 15.6% 59000 9204
Total 87200 100% 59000
3 Insurance:
Value of assets percentage of Indirect Allocated
Department (a) in use (b) assets values in total © cost (d) Cost (c*d)
Materials 82000 82000/136900*100 = 59.9% 16900 10123
Personnel 1100 1100/136900*100    = 0.8% 16900 135
Manufacturing 38300 38300/136900*100 = 28% 16900 4732
Packaging 15500 15500/136900*100 = 11.3% 16900 1910
Total 136900 16900
Ans.2 Particulars Supervision Utilities Insurance Total
Materials 11033 18939 10123 40096
Personnel 2597 3127 135 5860
Manufacturing 41544 27730 4732 74006
Packaging 18826 9204 1910 29939
Total 74000 59000 16900 149900

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