Advertising department expenses of $48,200 and purchasing department expenses of

ID: 2520221 • Letter: A

Question

Advertising department expenses of $48,200 and purchasing department expenses of $40,200 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 the following table by allocating the expenses of the two service departments (advertising and purchasing) to the three operating departments.

Department Sales Purchase Orders Books $ 167,700 1,232 Magazines 89,700 756 Newspapers 132,600 812 Total $ 390,000 2,800

Explanation / Answer

Advertising department expenses will allocate based on sales and purchasing department expenses will allocate based on purchase orders

Departments Advertising department expenses Purchasing department expenses Books $48,200/$390,000*$167,700 = $20,726 $40,200/2,800*1,232 = $17,688 Magazines $48,200/$390,000*$89,700 = $11,086 $40,200/2,800*756 = $10,854 Newspapers $48,200/$390,000*$132,600 = $16,388 $40,200/2,800*812 = $11,658 Total $ 48,200 $ 40,200

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

Advertising department expenses of $48,200 and purchasing department expenses of

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Advertising department expenses of $48,200 and purchasing department expenses of

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