Advertising department expenses of $47,500 and purchasing department expenses of

ID: 2516693 • Letter: A

Question

Advertising department expenses of $47,500 and purchasing department expenses of $27,100 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 Department Books Magazines Newspapers Total 166,600 78,200 95,200 $340,000 880 660 660 2,200 Complete the following table by allocating the expenses of the two service departments (advertising and purchasing) to the three operating departments. Complete this question by entering your answers in the tabs below

Explanation / Answer

Advertising Allocation Base Department Numerator Denominator % Of total Base Cost to be allocated Allocated Cost Books Department Sales 166600 340000 0.49 47500 23275 Magazines Department Sales 78200 340000 0.23 47500 10925 Newspapers Department Sales 95200 340000 0.28 47500 13300 Purchasing Allocation Base Department Numerator Denominator % Of total Base Cost to be allocated Allocated Cost Books Department Purchase Orders 880 2200 0.4 27100 10840 Magazines Department Purchase Orders 660 2200 0.3 27100 8130 Newspapers Department Purchase Orders 660 2200 0.3 27100 8130

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Advertising department expenses of $47,500 and purchasing department expenses of

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