Savod Help Marathon Running Shop has two service departments (advertising and ad

Question

Savod Help Marathon Running Shop has two service departments (advertising and administrative) and two operating departments (shoes an clothing). The table that follows shows the direct expenses incurred and square footage occupied by all four departments, as we total sales for the two operating departments for the year 2017 18,00e 30,080 102,000 14,000 400 400 Advertising Administrative Shoes Clothing 1,600$150,0e 100,000 2,600 The advertising department developed and distributed 120 advertisements during the year. Of these, 36 promoted shoes and 84 promoted clothing. Utilities expense of $66,000 is an indirect expense to all departments. omplete a departmental expense allocation spreadsheet for Marathon Running Shop. The spreadsheet should assign (0 direct expenses to each of the four departments. (2) the $66,000 of utilities expense to the four departments on the basis of floor space ccupied, (3) the advertising department's expenses to the two operating departments on the basis of the number of ads placed t romoted a department's products, and (4) the administrative department's expenses to the two operating departments based on mount of sales Cost to be Allocated Cost Allocated tilities Allocation Base Percent of Numerator ?Denominatd1% of Total epartment Advertising Administrative Shoes ?

Explanation / Answer

UTILITIES ALLOCATION BASE NUM. DENOM. % OF TOTAL COST TO BE ALLOCATED ALLOCATED COST Advertisement Sq. ft of floor 400 5000 8.00% 66000 5280 Admin Sq. ft of floor 400 5000 8.00% 66000 5280 Shoes Sq. ft of floor 1600 5000 32.00% 66000 21120 Clothing Sq. ft of floor 2600 5000 52.00% 66000 34320 5000 5000 100.00% 66000 66000 Advertising ALLOCATION BASE NUM. DENOM. % OF TOTAL COST TO BE ALLOCATED ALLOCATED COST Shoes No. Of Advertisement 36 120 30.00% 23280 6984 Clothing No. Of Advertisement 84 120 70.00% 23280 16296 120 120 100.00% 23280 23280 Administrative ALLOCATION BASE NUM. DENOM. % OF TOTAL COST TO BE ALLOCATED ALLOCATED COST Shoes Sales 150,000 250000 60.00% 35280 21168 Clothing Sales 100,000 250000 40.00% 35280 14112 250,000 250000 100.00% 35280 35280 DEPARTMENTAL EXPENSE ALLOCATION SPREADSHEET Expense Total Advertisement Admin Shoes Clothing Direct expense 164000 18,000 30000 102000 14000 Indirect utilities 66000 5280 5280 21120 34320 Total Deptt expense 230000 23280 35280 123120 48320 Service deptt expense Advertisement 0 -23280 6984 16296 Admin 0 -35280 21168 14112 Total expense allocated 230000 0 0 151272 78728

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