Advertising department expenses of $57,800 and purchasing department expenses of

Question

Advertising department expenses of $57,800 and purchasing department expenses of $57,800 of Cozy Bookstore are allocated to operating departments on the basis of dollar sales and purchase orders, respectively. Information about the allocation bases for the three operating departments follows.

Advertising department expenses of $57,800 and purchasing department expenses of $57,800 of Cozy Bookstore are allocated to operating departments on the basis of dollar sales and purchase orders, respectively. Information about the allocation bases for the three operating departments follows. Sales Purchase Orders Books $184,900 107,500 137,600 816 476 408 Total $430,000 1,700 Complete the following table by allocating the expenses of the two service departments (advertising and purchasing) to the three operating departments. (Amounts to be deducted should be indicated with minus sign.) ing Allocation Base f Allocation Bas Cost to be Allocated Allocated Cost Numerator %of Total Books Dept Magazines Dept Newspapers Dept Totals Allocation Base ercent of Allocation Bas Cost to be Allocated Allocated Cost Numerator %of Total Books Dept Magazines Dept Newspapers Dept Totals Allocation of Expenses to Departments ExpenseA Account Balance Advertising Purchasing Purchasing Books Dept. Magazines Dept. location Base Dept. Dept. Dept. Total department expenses S 578,000 S57800 S57,800 S 1 138,700 S 115,600 S 20B,100 Advertising Dept. Sales Purchasing Dept. Purch. orders Total expenses allocated to S 578,000 S57800 S57,800 S 138,700S 115,600 S 20B,100 g depts

Explanation / Answer

Advertising Allocation Base Percent of allocation base Cost to be allocated Allocated cost Department Sales Numerator Deniminator % of total   Books Dept. 184900 184900 430000 43 57800 24854   Magazines Dept. 107500 107500 430000 25 57800 14450   Newspapers Dept. 137600 137600 430000 32 57800 18496   Totals 430000 100 57800 Purchasing Allocation Base Percent of allocation base Cost to be allocated Allocated cost Department No of orders Numerator Deniminator % of total   Books Dept. 816 816 1700 48 57800 27744   Magazines Dept. 476 476 1700 28 57800 16184   Newspapers Dept. 408 408 1700 24 57800 13872   Totals 1700 100 57800 Advertising: $57,800 Sales % of Total Cost   Books Dept. 184900 43 24854   Magazines Dept. 107500 25 14450   Newspapers Dept. 137600 32 18496   Totals 430000 100 57,800 Purchasing: $57,800 Purchase Orders % of Total Cost   Books Dept. 816 48 27744   Magazines Dept. 476 28 16184   Newspapers Dept. 408 24 13872   Totals 1700 100 57800 Cozy Book Store Departmental Expense Allocation Spreadsheet Expense Account Balance Advertising Purchasing Books Magzines Newspapers Tot Dept Exp 0 57800 57800 184900 107500 137600 Service Dept Expense Advertising Dept -57800 24854 14450 18496 Purchassing Dept -57800 27744 16184 13872 Total Expense allocated 0 0 0 237498 138134 169968

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