datl ol CUloM t Selected hee Expenses de- 11-2B. Assigning Traceable Fixed partm

Question

datl ol CUloM t Selected hee Expenses de- 11-2B. Assigning Traceable Fixed partments, follow Department B $144,000 216,000 540,000 13,500 Department A 40,000 360,000 607,500 27,000 Department C $ 56,000 144,000 202,500 Inventory Square feet of floor space . 4,500 During the year, the company's fixed expenses included the following: 18,000 Personal property taxes (on inventory and equipment).. . .. . .. .. .. 30,000 Assume that the property tax rate is the same for both inventory and equipment. Using the most causally related bases, prepare a schedule assigning the fixed expenses to the three departments. Hint: Not fixed expenses are traceable to the three departments.One of these fixed costs should be considereda common cost and not traceable to the departments

Explanation / Answer

Depreciation :

Total depreciation = $ 60000. Total cost of equipment =$ 360000+ 216000+ 144000 = $ 720000

Dep A (360000/720000)*60000 = $ 30000

Dep B. (216000/720000)*60000 = $ 18000

Dep C. (144000/720000)*60000= $ 12000

Real estate tax is traceable as area usage by departments is given.

Total tax = $ 18000. Total square feet used = 27000+ 13500+ 4500 = 45000

Dep A (27000/45000)* 18000 = $ 10800

Dep B. ( 13500/45000)* 18000= $ 5400

Dep C. ( 4500/ 45000) *18000= $ 1800

Personal property tax is traceable because

Under a property-tax system, the government requires or performs an appraisal of the monetary value of each property, and tax is assessed in proportion to that value

Total tax $ 28800. Total of equipment and inventory = Dep A (40000+ 360000) + Dep B (144000+216000) + Dep C.

(56000+ 144000). = 400000+ 360000 + 200000. = $ 960000

Dep A (400000/960000)* 28800. =$ 12000

Dep B. (360000/960000)* 28800 = $ 10800

Dep C. (200000/960000)* 28800 = $ 6000

Personnel department expense

the department responsible for hiring and training and placing employees and for setting policies for personnel management , so these are shared expense for providing a service to whole business can't be attributed to a single department also there is  lack of sufficient data for its assignment to department.

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