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Safari File Edit View History Bookmarks Develop Window Help ID ezto.mheducation.com Facebook Twitter Apple Chapter 24 Hormework value 10.00 points 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 persornel, manufacturing, and packaging. In a recent Indirect Expense Cost Allocation Base Supervision $ 82,500 Number of employees Utilities Insurance 50,000 22,500 Square foet occupied Value of assets in use 155,000 Total Departmental data for the company's recent reporting period follow Department Employees Square Feet Asset Values 27 25,000 6,000 1,200 55,000 37,800 5,000 15,000 5,000 63 51 Packaging Total 150 100,000 $60,000 1. Use this information to allocate each of the three indirect expenses across the four departments.

Explanation / Answer

1. Allocation of indirect expenses:

2.

Supervision expenses Allocation base Numerator Denominator % of total x Indirect cost Allocated cost Department Number of employees Materials 27 27 150 18% $ 82,500 $ 14,850 Personnel 9 9 150 6% $ 82,500 $ 4,950 Manufacturing 63 63 150 42% $ 82,500 $34,650 Packaging 51 51 150 34% $ 82,500 $28,050 Total 150 100% $ 82,500 Utilities Square feet occupied Materials 25,000 25,000 100,000 25% $ 50,000 $12,500 Personnel 5,000 5,000 100,000 5% $ 50,000 $ 2,500 Manufacturing 55,000 55,000 100,000 55% $ 50,000 $ 27,500 Pakaging 15,000 15,000 100,000 15% $ 50,000 $ 7,500 Total 100,000 100% $ 50,000 Insurance Value of assets in use Materials $ 6,000 6,000 60,000 10% 22,500 $ 2,250 Personnel $ 1,200 1,200 60,000 2% 22,500 $ 450 Manufacturing $ 37,800 37,800 60,000 63% 22,500 $ 14,175 Packaging $ 15,000 15,000 60,000 25% 22,500 $ 5,625 Total $ 60,000 $ 22,500

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