Woh Che Co. has four departments: materials, personnel,manufacturing, and packaging. In a recent month, the fourdepartments incurred three shared indirect expenses. The amounts ofthese indirect expenses and the bases used to allocate themfollow.
Indirect Expense | | Cost | Allocation Base |
Supervision | $ | 82,500 | Number ofemployees |
Utilities | | 50,000 | Square feet occupied |
Insurance | | 22,500 | Value of assets in use |
Total | $ | 155,000 | |
Departmental data for the company’s recent reporting periodfollow.
Department | Employees | | Square Feet | | Asset Values | Materials | | 27 | | | | 25,000 | | | | $ | 6,000 | | Personnel | | 9 | | | | 5,000 | | | | | 1,200 | | Manufacturing | | 63 | | | | 55,000 | | | | | 37,800 | | Packaging | | 51 | | | | 15,000 | | | | | 15,000 | | Total | | 150 | | | | 100,000 | | | | $ | 60,000 | | 1. Use this information to allocate each of thethree indirect expenses across the four departments. 2. Prepare a summary table that reports theindirect expenses assigned to each of the four departments.
| | Supervision expenses | Allocation Base | Percent of Allocation Base | Cost to be Allocated | Allocated Cost | Department | Number of employees | Numerator | Denominator | % ofTotal | | | Materials | | | | 0 | | | Personnel | | | | 0 | | | Manufacturing | | | | 0 | | 0 | Packaging | | | | 0 | | | Totals | | | | 0 | | | Utilities | Allocation Base | Percent of Allocation Base | Cost to be Allocated | Allocated Cost | Department | | Numerator | Denominator | % of Total | | | Materials | | | | 0 | | | Personnel | | | | 0 | | | Manufacturing | | | | 0 | | 0 | Packaging | | | | 0 | | | Totals | | | | 0 | | | Insurance | Allocation Base | Percent of Allocation Base | Cost to be Allocated | Allocated Cost | Department | | Numerator | Denominator | % of Total | | | Materials | | | | 0 | | | Personnel | | | | 0 | | | Manufacturing | | | | 0 | | 0 | Packaging | | | | 0 | | | Totals | | | | 0 | |
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| | Supervision | Utilities | Insurance | Total | Materials | | | | $0 | Personnel | | | | 0 | Manufacturing | | | | 0 | Packaging | | | | 0 | Totals | $0 | $0 | $0 | $0 |
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