Question

Prepare a summary table that reports the indirect expenses assigned to each of the four departments.

	Supervision Utilities Insurance Total Materials Personnel Manufacturing Packaging Totals

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.

Use this information to allocate each of the three indirect expenses across the four departments.

Supervision expenses Allocation Base Percent of Allocation Base Cost to be Allocated Allocated Cost Department Numerator Denominator % of Total Materials Personnel Manufacturing Packaging Totals Utilities Allocation Base Percent of Allocation Base Cost to be Allocated Allocated Cost Department Numerator Denominator % of Total Materials Personnel Manufacturing Packaging Totals Insurance Allocation Base Percent of Allocation Base Cost to be Allocated Allocated Cost Department Numerator Denominator % of Total Materials Personnel Manufacturing Packaging Totals

Answer 1

Ans.1	Suprevision expenses:
		Allocation base	Percent of Allocation Base			Cost to be allocated	Allocated cost
	Department		Numerator	Denominator	% of Total
	Material	40	40	160	25%	84100	21025
	Personnel	8	8	160	5%	84100	4205
	Manufacturing	64	64	160	40%	84100	33640
	Packaging	48	48	160	30%	84100	25230
	Totals	160			100%		84100
	Utilities:
		Allocation base	Percent of Allocation Base			Cost to be allocated	Allocated cost
	Department		Numerator	Denominator	% of Total
	Material	31000	31000	155000	20%	66000	13200
	Personnel	15500	15500	155000	10%	66000	6600
	Manufacturing	77500	77500	155000	50%	66000	33000
	Packaging	31000	31000	155000	20%	66000	13200
	Totals	155000			100%		66000
	Insurance:
		Allocation base	Percent of Allocation Base			Cost to be allocated	Allocated cost
	Department		Numerator	Denominator	% of Total
	Material	7600	7600	76000	10%	30500	3050
	Personnel	2280	2280	76000	3%	30500	915
	Manufacturing	50160	50160	76000	66%	30500	20130
	Packaging	15960	15960	76000	21%	30500	6405
	Totals	76000			100%		30500
	% of Total = Numerator / Denominator * 100
Ans.2	Department	Supervision	Utilities	Insurance	Total
	Material	21025	13200	3050	37275
	Personnel	4205	6600	915	11720
	Manufacturing	33640	33000	20130	86770
	Packaging	25230	13200	6405	44835
	Totals	84100	66000	30500	180600