Question

Advertising department expenses of $25,300 and purchasing department expenses of $20,200 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. Sales Purchase Orders Department Books Magazines Newspapers Total $182,400 87,400 110,200 $ 380,0ee 1,025 625 850 2,500 Complete the following table by allocating the expenses of the two service departments (advertising and purchasing) to the three operating departments. Complete this question by entering your answers in the tabs below

Answer 1

Answer

• All working forms part of the answer
• Requirement 1

Advertising	Allocation base	% of allocation base			Cost to be allocated	Allocated cost
Department:	Sales	Numerator	Denominator	% of total
Books	Sales	182,400	380,000	48.00%	$           25,300.00	$    12,144.00
Magazines	Sales	87,400	380,000	23.00%	$           25,300.00	$      5,819.00
Newspapers	Sales	110,200	380,000	29.00%	$           25,300.00	$      7,337.00
Totals		380,000				$    25,300.00

Purchasing	Allocation base	% of allocation base			Cost to be allocated	Allocated cost
Department:	Purchase orders	Numerator	Denominator	% of total
Books	Purchase orders	1,025	2,500	41.00%	$           20,200.00	$      8,282.00
Magazines	Purchase orders	625	2,500	25.00%	$           20,200.00	$      5,050.00
Newspapers	Purchase orders	850	2,500	34.00%	$           20,200.00	$      6,868.00
Totals		2,500				$    20,200.00

• Requirement 2

	Expense Totals	Advertising	Purchasing	Books	Magazines	Newspapers
Total department expenses	$      506,000.00	$    25,300.00	$                                    20,200.00	$        101,200.00	$ 101,200.00	258100
Service Department expenses:
Advertising		$ (25,300.00)		$           12,144.00	$      5,819.00	$            7,337.00
Purchasing			$                                 (20,200.00)	$             8,282.00	$      5,050.00	$            6,868.00
Total Expense allocated	$      247,900.00	$                    -	$                                                   -	$        121,626.00	$ 112,069.00	$          14,205.00