Advertising department expenses of $26,700 and purchasing department expenses of
ID: 2480136 • Letter: A
Question
Advertising department expenses of $26,700 and purchasing department expenses of $46,700 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.
Complete a 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.)
Advertising
Allocation Base
Percent of Allocation Base
Cost to be Allocated
Allocated Cost
Department
Numerator
Denominator
% of Total
Books Dept
Magazines Dept
Newspapers Dept
Totals
Purchasing
Allocation Base
Percent of Allocation Base
Cost to be Allocated
Allocated Cost
Department
Numerator
Denominator
% of Total
Books Dept
Magazines Dept
Newspapers Dept
Totals
COZY BOOKSTORE
Allocation of Expenses to Departments
Allocation Base
Expense Account Balance
Advertising Dept.
Purchasing Dept.
Books Dept.
Magazines Dept.
Dept.Newspapers Dept.
Total department expenses
$ 667,000
$ 26,700
$ 46,700
$ 140,100
$ 133,400
$ 320,100
Advertising Dept. Sales
Purchasing Dept. Purch. orders
Total expenses allocated to operating depts.
$667,000
Advertising department expenses of $26,700 and purchasing department expenses of $46,700 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.
Explanation / Answer
Assumptions as per details provided in the assignment
Allocation of advertising department expense as per sales amount ratio between books,magazines and newspaper department
Allocation of purchase department expense as per purchase order ration between books,magazines and newspaper department
The advertising cost to be allocated is $26,700
Complete a table by allocating the expenses of the service departments advertising to the three operating departments. (Amounts to be deducted should be indicated with minus sign.)
Advertising
Allocation Base
Percent of Allocation Base
Cost to be Allocated($)
Allocated Cost($)
Department
sales
Numerator
Denominator
% of Total
26700
Books Dept
180,400
180,400
410,000
44
11748
Magazines Dept
123,000
123,000
410,000
30
8010
Newspapers Dept
106,600
106,600
410,000
26
6942
Totals
410,000
410,000
100
26700
The cost is allocated to each department by using the formula cost to be allocated to respective department multiply by % allocation calculated by respective department
The purchase department expense of $46,700 allocated to each department
Complete a table by allocating the expenses of the ervice departments purchasing)the three operating departments. (Amounts to be deducted should be indicated with minus sign.)
Advertising
Allocation Base
Percent of Allocation Base
Cost to be Allocated($)
Allocated Cost($)
Department
purchase order
Numerator
Denominator
% of Total
46700
Books Dept
1,290
1,290
3,000
43
20081
Magazines Dept
690
690
3,000
23
10741
Newspapers Dept
1,020
1,020
3,000
34
15878
Totals
3,000
3,000
100
46700
The cost is allocated to each department by using the formula cost to be allocated to respective department multiply by % allocation calculated by respective department
COZY BOOKSTORE
Allocation of Expenses to Departments
Allocation Base
Expense Account Balance
Advertising Dept.
Purchasing Dept.
Books Dept.
Magazines Dept.
Dept.Newspapers Dept.
Total department expenses
$667,000
$26,700
$46,700
$140,100
$133,400
$320,100
Advertising Dept. Sales
($26,700)
11748
8010
6942
Purchasing Dept. Purch. orders
($46,700)
20081
10741
15878
Total expenses allocated to operating depts.
$667,000
$0
$0
$171,929
$152,151
$342,920
Complete a table by allocating the expenses of the service departments advertising to the three operating departments. (Amounts to be deducted should be indicated with minus sign.)
Advertising
Allocation Base
Percent of Allocation Base
Cost to be Allocated($)
Allocated Cost($)
Department
sales
Numerator
Denominator
% of Total
26700
Books Dept
180,400
180,400
410,000
44
11748
Magazines Dept
123,000
123,000
410,000
30
8010
Newspapers Dept
106,600
106,600
410,000
26
6942
Totals
410,000
410,000
100
26700
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