Question

Departmental expense allocation spreadsheet.

Marathon Running Shop has two service departments (advertising and administrative) and two operating departments (shoes and clothing). The table that follows shows the direct expenses incurred and square footage occupied by all four departments, as well as total sales for the two operating departments for the year 2017 Direct Square Feet Department Advertising Administrative Shoes Clothing Expenses $ 19,000 34,000 112,000 17,000 Sales 850 1,530 5,780 8,840 $121,800 168,200 The advertising department developed and distributed 200 advertisements during the year Of these, 20 promoted shoes and 180 promoted clothing Utilities expense of $50,000 is an indirect expense to all departments. Complete a departmental expense allocation spreadsheet for Marathon Running Shop. The spreadsheet should assign () direct expenses to each of the four departments, (2) the $50,000 of utilities expense to the four departments on the basis of floor space occupied, (3) the advertising department's expenses to the two operating departments on the basis of the number of ads placed that promoted a department's products, and (4) the administrative department's expenses to the two operating departments based on the amount of sales.

Answer 1

Answers

[1]

Utilities	Allcocation base	Numerator	Denominator	% of total	Cost to be allocated	Allocated Cost
Department:	Square feet
Advertising	Square feet	850	17000	5%	$50,000	$2,500
Administrative	Square feet	1530	17000	9%	$50,000	$4,500
Shoes	Square feet	5780	17000	34%	$50,000	$17,000
Clothing	Square feet	8840	17000	52%	$50,000	$26,000
Totals		17000		100%		$50,000
Advertising	Allcocation base	Numerator	Denominator	% of total	Cost to be allocated	Allocated Cost
Department:	No. of ads
Shoes	No. of ads	20	200	10%	$21,500	$2,150
Clothing	No. of ads	180	200	90%	$21,500	$19,350
Totals		200		100%		$21,500
Administrative	Allcocation base	Numerator	Denominator	% of total	Cost to be allocated	Allocated Cost
Department:	Amount of sales
Shoes	Amount of sales	121800	290000	42%	$38,500	$16,170
Clothing	Amount of sales	168200	290000	58%	$38,500	$22,330
Totals		290000		100%		$38,500

[2]

	Expense Totals	Advertising	Administrative	Shoes	Clothing
Direct Expenses	$182,000	$19,000	$34,000	$112,000	$17,000
Indirect Utilities expense	$50,000	$2,500	$4,500	$17,000	$26,000
Total Dept Expense	$232,000	$21,500	$38,500	$129,000	$43,000
Service Depart Expenses:
Advertising Dept	$0	($21,500)		$2,150	$19,350
Administrative dept	$0		($38,500)	$16,170	$22,330
Total Expense allocated	$232,000	$0	$0	$147,320	$84,680