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	$	70,000	Number of employees
Utilities		64,000	Square feet occupied
Insurance		17,000	Value of assets in use
Total	$	151,000

    

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

    

Department	Employees			Square Feet			Asset Values
Materials		18			29,000		$	34,000
Personnel		8			4,700			1,200
Manufacturing		65			50,000			38,300
Packaging		32			13,500			14,800
Total		123			97,200		$	88,300

   

(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	Supervision Expenses:
		Number of	percentage of	Indirect	Allocated
	Department (a)	employees (b)	employees in total ©	cost (d)	Cost (c*d)
	Materials	18	18/123 * 100   = 14.634%	70000	10244
	Personnel	8	8/123*100       =   6.504%	70000	4553
	Manufacturing	65	65/123*100     = 52.846%	70000	36992
	Packaging	32	32/123*100     = 26.016%	70000	18211
	Total	123	100%		70000
2	Utilities:
		Sqare feet	percentage of	Indirect	Allocated
	Department (a)	occupied (b)	sq. feet in total ©	cost (d)	Cost (c*d)
	Materials	29000	29000/97200 * 100 = 29.835%	64000	19094.4
	Personnel	4700	4700/97200 * 100    = 4.835%	64000	3094.4
	Manufacturing	50000	50000/97200 * 100 = 51.44%	64000	32921.6
	Packaging	13500	13500/97200 * 100 = 13.89%	64000	8889.6
	Total	97200	100%		64000
3	Insurance:
		Value of assets	percentage of	Indirect	Allocated
	Department (a)	in use (b)	assets values in total ©	cost (d)	Cost (c*d)
	Materials	34000	34000/88300*100 = 38.51%	17000	6547
	Personnel	1200	1200/88300*100 = 1.36%	17000	231
	Manufacturing	38300	38300/88300*100 = 43.37%	17000	7373
	Packaging	14800	14800/88300*100 = 16.76%	17000	2849
	Total	88300			17000
Ans.2	Particulars	Supervision	Utilities	Insurance	Total
	Materials	10244	19094	6547	35885
	Personnel	4553	3094	231	7878
	Manufacturing	36992	32922	7373	77287
	Packaging	18211	8890	2849	29950
	Total	70000	64000	17000	151000