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 Supervision Utilities Insurance Total Cost $ 83,100 Number of employees Allocation Base 56,000 Square feet occupied 25,500 Value of assets in use $164,600 Departmental data for the company's recent reporting period follow Asset Values Department Materials Personnel Manufacturing Packaging Total Employees Square Feet 3 4 17 68 51 170 32,000 16,000 88,000 24,000 160,000 $13,200 1,980 34,980 15,840 $66,000 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 1

Supervision Expenses	Allocation base	Percent of allocation base			Cost to be allocated	Allocated cost
Department		Numerator	Denominator	% of total
Material	Number of enployees	34	170	20%	$ 83,100.00	$      16,620.00
Personnel	Number of enployees	17	170	10%	$ 83,100.00	$        8,310.00
Manufacturing	Number of enployees	68	170	40%	$ 83,100.00	$      33,240.00
Packaging	Number of enployees	51	170	30%	$ 83,100.00	$      24,930.00
Totals		170		100%		$      83,100.00
Utilities	Allocation base	Percent of allocation base			Cost to be allocated	Allocated cost
Department		Numerator	Denominator	% of total
Material	Square feet occupied	32000	160000	20%	$ 56,000.00	$      11,200.00
Personnel	Square feet occupied	16000	160000	10%	$ 56,000.00	$        5,600.00
Manufacturing	Square feet occupied	88000	160000	55%	$ 56,000.00	$      30,800.00
Packaging	Square feet occupied	24000	160000	15%	$ 56,000.00	$        8,400.00
Totals		160000		100%		$      56,000.00
Insurance	Allocation base	Percent of allocation base			Cost to be allocated	Allocated cost
Department		Numerator	Denominator	% of total
Material	Value of asset in use	13200	66000	20%	$ 25,500.00	$        5,100.00
Personnel	Value of asset in use	1980	66000	3%	$ 25,500.00	$            765.00
Manufacturing	Value of asset in use	34980	66000	53%	$ 25,500.00	$      13,515.00
Packaging	Value of asset in use	15840	66000	24%	$ 25,500.00	$        6,120.00
Totals		66000		100%		$      25,500.00

Requirement 2

	Supervision	Utilities	Insurance	Total
Material	$ 16,620.00	$ 11,200.00	$   5,100.00	$       32,920.00
Personnel	$    8,310.00	$    5,600.00	$       765.00	$       14,675.00
Manufacturing	$ 33,240.00	$ 30,800.00	$ 13,515.00	$       77,555.00
Packaging	$ 24,930.00	$    8,400.00	$   6,120.00	$       39,450.00
Totals	$ 83,100.00	$ 56,000.00	$ 25,500.00	$    1,64,600.00