SHITE Problem T ABC Sports Company has two service departments (advertising and
ID: 2585716 • Letter: S
Question
SHITE Problem T ABC Sports Company has two service departments (advertising and administrative) and two operating departments (sports equipment and clothing). During 2008, the departments had the following direct expenses and occupied the following floor space. Ctrl Department | Advertising Administrative | Sports equipment Clothing Direct Expenses $22,000 28,000 122,000 18,000 Square Feet 1,200 1,550 8,250 4,000 Advertising department developed and distributed 140 ads during the year (84 promoted sports equipment and 56 promoted clothing). The store sold $475,000 of merchandise during the year ($370,500 sports equipment and $104,500 clothing). The utilities expense of $84,000 is an indirect expense of all departments. Required: 1. Prepare a departmental expense allocation spreadsheet for ABC Sports Company. 2. The spreadsheet should assign: a. Direct expenses to each of the four departments, b. The $84,000 of utilities expense to the four departments on the basis of floor space occupied, c. The advertising department's expense to the two operating departments on the basis of the number of ads placed that promoted a department's products, and d. The administrative department's expenses to the two operating departments based on the amount of sales. 3. Provide supporting computations for the expense allocations. See next page to record answer for required Part Part 3. Some (not all) of the titles have already been setup for you.Explanation / Answer
Answer:
Part 1 & 2:
Part 3:
2c. Advertising Expense Allocation
2d. Administrative Expense Allocation
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Allocation of Expense to Departments Expense Total Advertising Administrative Sports Equipment Clothing Direct Expense 190000.00 22000.00 28000.00 122000.00 18000.00 Indirect utilities Expense 84000.00 6720.00 8680.00 46200.00 22400.00 Total dept. expense 274000.00 28720.00 36680.00 168200.00 40400.00 Service Dept. Expense Advertising Dept. -28720.00 17232.00 11488.00 Administrative Dept. -36680.00 28610.40 8069.60 Total Exp Allocated to operating depts. 0.00 0.00 214042.40 59957.60Related Questions
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