4. Franklin Co. has three departments: purchasing, human resources, and assembly

Question

4. Franklin Co. has three departments: purchasing, human resources, and assembly. In a recent month the three departments incurred two shared indirect expenses. The amounts of the indirect expenses and the bases used to allocate them follow. Use this information to allocate each of the two indirect expenses across the three departments using the tables provided below. (12 Points) Indirect Expense Supervision Utilities and Insurance Total Cost Allocation Base S85,000 Number of employees 38,000 Square feet occupied 123,000 Departmental data for the company's recent reporting period follow Department Purchasing Human Resources Assembly Total Employees Square Feet 15,000 10,000 25,000 50,000 10 20 36 Supervision Purchasin,g Human Resources Assembly Total Base % of Total Cost Base % of Total Cost Utilities and Insurance Purchasing Human Resources Assembly Total

Explanation / Answer

Answer:-

A)-Allocation of Indirect Expense in three depratments Allocation of Supervision expense Particulars Base % of Total Cost No. of Employees $ Purchasing $85000*10/36 $23611/$85000*100=28% 23611 Human Resources $85000*6/36 $14167/$85000*100=17% 14167 Assembly $85000*20/36 $47222/$85000*100=55% 47222 Total 85000

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