Question

Marathon Running Shop has two service departments (advertsing and adminlistrative) and two operating departments (shoes and clothing) The table that follows shows the direct expenses Incurred and square footage occupled by all four departments, as well as total sales for the two operating departments for the year 2017 12.000 600 420 Shees Clothing 31,000 85,000 16,000 2, 340 $125,200 2.640 124,800 The advertising department developed and distributed 140 advertsements durtng the year Of these, 14 promoted shoes and 126 promoted clothing. Utlites expense of $50,000 is an indirect expense to all dopartments Complete a departmental expense allocation spreadsheet for Marathon Running Shop The spreadsheet should assign n drect expenses to each of the four departments, (2) the $50,000 of utiithes expense to t occupied (3) the adverbsing department's expenses to the two operating departments on the basis of the number promoted a department's products, and 4) the administrative department's expenses to the two operating departments baced on the the four departments on the basis of floor space of ads placed that amount of sales. nBase Cost to be A Advertising for Year Ended Dr

Answer 1

UTILITIES
			ALLOCATION BASE		NUM.	DENOM.	% OF TOTAL		COST TO BE		ALLOCATED
									ALLOCATED		COST
Advertisement			Sq. ft of floor		600	6000	10.00%		50000		5000
Admin			Sq. ft of floor		420	6000	7.00%		50000		3500
Shoes			Sq. ft of floor		2340	6000	39.00%		50000		19500
Clothing			Sq. ft of floor		2640	6000	44.00%		50000		22000
					6000	6000	100.00%		50000		50000
Advertising
			ALLOCATION BASE		NUM.	DENOM.	% OF TOTAL		COST TO BE		ALLOCATED
									ALLOCATED		COST
Shoes			No. Of Advertisement		14	140	10.00%		17000		1700
Clothing			No. Of Advertisement		126	140	90.00%		17000		15300
					140	140	100.00%		17000		17000
Administrative
			ALLOCATION BASE		NUM.	DENOM.	% OF TOTAL		COST TO BE		ALLOCATED
									ALLOCATED		COST
Shoes			Sales		125,200	250000	50.08%		34500		17277.6
Clothing			Sales		124,800	250000	49.92%		34500		17222.4
					250,000	250000	100.00%		34500		34500
DEPARTMENTAL EXPENSE ALLOCATION SPREADSHEET
			Expense Total		Advertisement		Admin	Shoes	Clothing
Direct expense			144,000		12,000		31000	85000	16000
Indirect utilities			50000		5000		3500	19500	22000
Total Deptt expense			194,000		17,000		34,500	104,500	38,000
Service deptt expense
Advertisement			0		-17000			1700	15300
Admin			0				-34500	17277.6	17222.4
Total expense allocated			194,000		0		0	123,478	70,522