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National Retail has two departments, Housewares and Sporting. Indirect expenses for the period follow. Rent...

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Accounting

National Retail has two departments, Housewares and Sporting.

Indirect expenses for the period follow.

Rent $ 45,000 Advertising 25,000 Insurance 10,000 Total $ 80,000

The company occupies 4,000 square feet of a rented building. In prior periods, the company divided the $80,000 of indirect expenses by 4,000 square feet to find an average cost of $20 per square foot, and then allocated indirect expenses to each department based on the square feet it occupied.

The company now wants to allocate indirect expenses using the allocation bases shown below.

Department Square Feet Sales Value of Insured Assets Housewares 2,120 $ 200,000 $ 42,000 Sporting 1,880 300,000 58,000 Total 4,000 $ 500,000 $ 100,000

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