Advertising department expenses of $43,400 and purchasing department expenses of

Question

Advertising department expenses of $43,400 and purchasing department expenses of $57,800 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 Sales Purchase Orders 984 672 744 $175,000 105,000 70,000 Total $350,000 2,400 Complete the following table by allocating the expenses of the two service departments (advertising and purchasing) to the three operating departments. (Amounts to be deducted should be indicated with minus sign.) Cost to be Allocated Advertising Allocation Base Percent of Allocation Base Allocated Cost Department Numerator | Denominator | % of Total Books Dept Magazines Dept Newspapers Dept Totals Cost to be Allocated Purchasing Allocation Base Percent of Allocation Base Allocated Cost Department Numerator | Denominator | % of Total Books Dept Magazines Dept Newspapers Dept Totals

Explanation / Answer

Totals

Cozy Bookstore

Advertising Allocation Base Numerator Denominator % of Total Cost to be Allocated Allocated Cost Department Sales Dollars $ 43,400 Books $175,000 175,000 350,000 50 $ 21,700 Magazines 105,000 105,000 350,000 30 13,020 Newpapers 70,000 70,000 350,000 20 8,680

Totals

$ 350,000 $ 43,400 Purchasing $ 57,800 Department Books 984 984 2,400 41 $ 23,698 Magazines 672 672 2,400 28 16,184 Newspapers 744 744 2,400 31 17,918 Totals 2,400 $ 57,800

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