Question

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	$	$	$	$

Answer 1

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