Exercise 9-2 Departmental expense allocation-spreadsheet LO P2 Marathon Running

Question

Exercise 9-2 Departmental expense allocation-spreadsheet LO P2 Marathon Running Shop has two service departments (advertising and administrative) and two operating departments (choes and clothing) n2015, the depatments had the following direct expenses and occupied the following amount of floor space. Square Feet Department Advertising Administrative Shoes 18,000 25,000 103,000 1,120 1,400 .140 Clothing 15,000 ,340 The advenising department developed and distributed 120 advertisements durng the year Of these, 90 promoted shoes and 30 promoted clothing. The store seld $350 000 of merchandise during the year Of this amount, $273,000 is from the shoes department, and $77,000 is from the clothing department. The utilities expense of $64,000 is an indirect expense to all departments Complete a depatmental expense allocation spreadsheet for Marathon Running Shop The spreadsheet should assign (1) direct expenses to each of the four departments, (2) the $64 ,000 of uities expense to the four departments on the basis of floor space occupied, (3) the advertising department's expenses to the two operating departments on the basis of the number of ads placed that promoted a department's products, and (4) the administrative department's expenses to the two oparating departments based on the amount of sales Percent of Allecation Base Cost to belAllocated Cost Allocated Utilities Allecation Base Departmert Numerator Denominator % of Total Advertising Administrative Shoes Clothing Q' Q', Ch 12-cardiovase..pptx " ^ ch 12-Carchovase..pptx ^ ch 11-lymphatic (1)ppt ?? 10-blood (2)ppt ^ 13-Nutrition.pptx ^ | SHIBA

Explanation / Answer

Utilitiess Allocation base Percent of Allocation base Cost Allocated Allocated cost Num. Den. % of Total Advertising Sq. ffeet 1120 14000 8% 64000 5120 Admin sq. feet 1400 14000 10% 64000 6400 Shoes sq. feet 7140 14000 51% 64000 32640 Clothing sq. feet 4340 14000 31% 64000 19840 14000 14000 64000 Advertisement Allocation base Percent of Allocation base Cost Allocated Allocated cost Num. Den. % of Total Shoes Number of Ads. 90 120 75% 23120 17340 Clothin Number of Ads. 30 120 25% 23120 5780 120 120 100% 23120 23120 Admin Allocation base Percent of Allocation base Cost Allocated Allocated cost Num. Den. % of Total Shoes Sale of Stores 273000 350000 78% 31400 24492 Clothin Sale of stores 77000 350000 22% 31400 6908 350000 350000 100% 31400 31400 DEPARTMENTAL EXPENSE ALLOCATION SHEET Expense Total Advertisement Admin Shoes Clothing Direct e xpense 161000 18000 25000 103000 15000 Utilities 64000 5120 6400 32640 19840 Total Department expense 225000 23120 31400 135640 34840 Servicce deptt. Expene Advertisement -23120 17340 5780 Admin -31400 24492 6908 Total expense Allocated 225000 0 0 177472 47528

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