Advertising department expenses of $31,600 and purchasing department expenses of

Question

Advertising department expenses of $31,600 and purchasing department expenses of $63,300 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. Department Books Magazines Newspapers Total Purchase Orders Sales $200,000 116,000 $400,000 552 348 300 1,200 84,000 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 Percent of Allocation Base Cost to be allocated Allocated Cost Numerator Denominator Percent of total sales Department Dollar Sales Sales of Deptt Total Sales Books Deptt 200000 200000 400000 50% 31600 15800 Magazine Deptt 84000 84000 400000 21% 31600 6636 Newspaper Deptt 116000 116000 400000 29% 31600 9164 TOTALS 400000 100% 31600 Purchasing Allocation Base Percent of Allocation Base Cost to be allocated Allocated Cost Numerator Denominator Percent of total orders Department Purchase orders Purchase orders Total Purch.Orders Books Deptt 552 552 1200 46% 63300 29118 Magazine Deptt 348 348 1200 29% 63300 18357 Newspaper Deptt 300 300 1200 25% 63300 15825 TOTALS 1200 100% 63300

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