Question

Woh Che Co. has four departments: Materials, Personnel, Manufacturing, and Packaging. In a recent month, the four departments incurred three shared indirect expenses. The amounts of these indirect expenses and the bases used to allocate them follow.

Indirect Expense		Cost	Allocation Base
Supervision	$	83,000	Number of employees
Utilities		55,000	Square feet occupied
Insurance		25,000	Value of assets in use
Total	$	163,000

Departmental data for the company’s recent reporting period follow.

Department	Employees				Square Feet				Asset Values
Materials		40				60,000				$	9,750
Personnel		8				7,500					1,300
Manufacturing		64				67,500					33,800
Packaging		48				15,000					20,150
Total		160				150,000				$	65,000

1. Use this information to allocate each of the three indirect expenses across the four departments.
2. Prepare a summary table that reports the indirect expenses assigned to each of the four departments.

Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Use this information to allocate each of the three indirect expenses across the four departments. Percent of Allocation Base Cost to be Allocated Allocated Cost $ $ Supervision expenses Department Materials Personnel Manufacturing Packaging Numerator 40 8 64 48 Denominator 160 160 160 160 % of Total 25.00% 5.00% 40.00% 30.00% 100.00% 83,300 83,300 83,300 83,300 Allocation Base Number of employees 40 8 64 48 160 Allocation Base Square feet occupied 60,000 7,500 67,500 15,000 150,000 20,825 4,165 33,320 24.990 83,300 Allocated Cost Totals Utilities Cost to be Allocated $ Department Materials Personnel Manufacturing Packaging Totals Percent of Allocation Base Numerator Denominator % of Total 60,000 150,000 40.00% 7.500 150,000 5.00% 67,500 150,000 45.00% 15,000 150,000 10.00% 100.00% 55,000 55,000 55,000 55,000 22,000 2,750 24,750 5,500 55,000 Allocated Cost Insurance Percent of Allocation Base Cost to be Allocated Department $ $ Materials Personnel Manufacturing Packaging Totals Allocation Base Value of assets in use 6,750 Ⓡ 1,300 33,800 20,150 62,000 Numerator $ 6,750 X 1,300 33,800 20,150 Denominator $ 65,000 65,000 65,000 65,000 % of Total 10.38% 2.00% 52.00% 25,000 25.000 25,000 25,000 3,750 500 13,000 7,750 25,000 31.00% 100.00% $

Answer 1

1
Supervision expenses	Allocation Base	Percent of Allocation Base			x Indirect Cost	Allocated Cost
Department	Number of employees	Numerator	Denominator	% of Total
Materials	40	40	160	25%	83000	$20,750
Personnel	8	8	160	5%	83000	$4,150
Manufacturing	64	64	160	40%	83000	$33,200
Packaging	48	48	160	30%	83000	$24,900
Totals	160			100%		$83,000
Utilities	Allocation Base	Percent of Allocation Base			x Indirect Cost	Allocated Cost
Department	Square feet occupied	Numerator	Denominator	% of Total
Materials	60,000	60,000	150,000	40%	55000	$22,000
Personnel	7,500	7,500	150,000	5%	55000	$2,750
Manufacturing	67,500	67,500	150,000	45%	55000	$24,750
Packaging	15,000	15,000	150,000	10%	55000	$5,500
Totals	150000			100%		$55,000
Insurance	Allocation Base	Percent of Allocation Base			x Indirect Cost	Allocated Cost
Department	Value of assets in use	Numerator	Denominator	% of Total
Materials	$9,750	$9,750	$65,000	15%	25000	$3,750
Personnel	1,300	$1,300	$65,000	2%	25000	$500
Manufacturing	33,800	$33,800	$65,000	52%	25000	$13,000
Packaging	20,150	$20,150	$65,000	31%	25000	$7,750
Totals	65000			100%		$25,000

2
	Supervision	Utilities	Insurance	Total
Materials	$20,750	$22,000	$3,750	$46,500
Personnel	$4,150	$2,750	$500	$7,400
Manufacturing	$33,200	$24,750	$13,000	$70,950
Packaging	$24,900	$5,500	$7,750	$38,150
Totals	83000	55000	25000	$163,000