Question

Exercise 22-6 Departmental expense allocetion spreadsheet LO P2 Marethon Running Shop hes two service depertments (advertising and noministrative) and two operating departments (shoes and clothing) The table that follows shows the direct expenses incurred end squere footsge occupied by all four departments, as well os total sales for the two operating cepartments for she year 2019 Deiparteent Advertising Adeinistrative shoes clothing Direct Sales enses Square Fert $ 13,000 31,000 85,000 16,00e $135200 124 8ee 2,340 640 The odvertising cepartment developed ond distributed 140 edvertisements during the year Of these. 14 promoted shoes and 126 promoted clothing Utilities expense of $50,000 is an indirect expense to ell departments Complete o departmental expense aliocation spreadsheet for Marathon Running Shop The spreadsheet should assign ( direct expenses to each of the four depertments. (2 the $50000 of utiities expense to he four depertments on the besis of floor space Dccupied. (3) the advertising department's expenses to the two operating depertments on the besis of the number of ods pieced thet promoted a department's products, and (4)the sdministrative department's expenses to the two operating departments besed on the amount of soles Cost to be Alocated Allocated Cost Uitibes Allocation Base Percent of Allocation Base Saf Tota Departiment Numerator Denaminator Adverssing Administralive Shoes Clathing Tatals Cost to be Alocatad Advertsing Alocation Base Percent of Allocation Base Allocatad Cost Denominalo %aTatal Department Numerator Shoes Clothing Totals Cost to be Allocated Percent of Alocation Base Alliocated Coat Allocation Base dministrative Denominator Department sod Total Numerator Shoes Cloing Totals MARATHON RUNNING SHOP Departmental Expense Allocation spreadsheet For Year Ended December 31, 2013 Shows Cloting Expense Totaie Aevertieng Aominietraive Dinect expense ieorect utitis experses Tolal dapt xp Service Dept Expenses Adverisrg Dipt Ast itve Diept Tacl eperses allocated

Answer 1

		Allocation		Percent of Allocation Base			cost to be	Allocated
Utilities		base					allocated	cost
Department		floor space occupied		numerator	Denominator	% of total
Advertising		600		600	6,000	10	50,000	5000
Administrative		420		420	6,000	7	50,000	3500
Shoes		2,340		2,340	6,000	39	50,000	19500
Clothing		2,640		2,640	6,000	44	50,000	22000
Totals		6,000				100		50000
Advertising		Allocation		Percent of Allocation Base			cost to be	Allocated
		base					allocated	cost
Department				numerator	Denominator	% of total
Shoes		14		14	140	10	17,000	1700
Clothing		126		126	140	90	17,000	15300
Totals		140				100		17000
Administrative		Allocation		Percent of Allocation Base			cost to be	Allocated
		base					allocated	cost
Department				numerator	Denominator	% of total
Shoes		135,200		135200	260000	52	34,500	17940
Clothing		124,800		124800	260000	48	34,500	16560
Totals		260,000				100		34500
		MARATHON RUNNING SHOP
		Departmental expense Allocation Spreadsheet
		For the year ended december 31,2017
		exp totals		advertising	administrative	shoes	Clothing
Direct Expense		144,000		12,000	31,000	85,000	16,000
indirect utilities exp		50000		5000	3500	19500	22000
total dept expense		194,000		17,000	34,500	104,500	38,000
service dept expense
advertising dept				-17,000		1700	15300
administrative dept					-34,500	17940	16560
total exp allocated		194,000		0	0	124,140	69,860