Question

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 2019 Sales Department Advertising Administrative Shoes Clothing Direct Expenses $ 18,888 38,800 128,888 16,eee Square Feet 380 350 2,380 2,ese $ 238,eee 182.ee The advertising department developed and distributed 180 advertisements during the year. Of these. 54 promoted shoes and 126 promoted clothing. Utilities expense of $63,000 is an Indirect expense to all departments. Complete a departmental expense allocation spreadsheet for Marathon Running Shop. The spreadsheet should assign (1) direct expenses to each of the four departments. (2) the $63,000 of utilities expense to the four departments on the basis of floor space occupleo, 3) the advertising departments 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 Utilities Allocation Base Cost to be allocated Cost Allocated Allocated Cost P ercent of Allocation Base Numerator Denominator % of Total Department Advertising Administrative Shoes Clothing Totals Allocation Base Advertising Cost to be Allocated Cost cos P ercent of Allocation Base Allocated Numerator Denominator % of Total 01 Department Shoes Clothing Totals 0 Administrative Allocation Base Cost to be Allocated Allocated cost Allocated Cost Percent of Allocation Base Numerator Denominator % of Total Department Shoes Clothing Totals 0 10 MARATHON RUNNING SHOP Departmental Expense Allocation Spreadsheet For Year Ended December 31, 2019 Expense Totals Advertising Administrative Shoes Clothing Direct expense Indirect utilities expenses Total dept. exp. Service Dept. Expenses Advertising Dept. Administrative Dept. 0 0 of os os o

Answer 1

Cost to be allocated Allocated Cost 300 63.000 3.780 63.000 4.410 63.000 28.980 63.000 25.830 63,000 Cost to be allocated Allocated Cost Answer: Utilities Departement Advertising Administrative Shoes Clothing Total Advertising Departement Shoes Clothing Total Administrative Departement Shoes Clothing Total Allocation Base Percent of Allocation base Floor Space Occupied Numerator Denominator | % of Total 300 5,000 6.00 350 350 5.000 7.00 2.300 2.300 5,000 46.00 2.050 2.050 5,000 41.00 5,000 100.00 Allocation Base Percent of Allocation base Number of Ads Numerator Denominator % of Total 54 180 30.00 126 126 180 70.00 180 100.00 Allocation Base Percent of Allocation base sales Numerator Denominator % of Total 238000 238000 3,40.000 70.00 102000 102000 3,40,000 30.00 340000 100.00 21 780 21,780 6,534 15.246 21,780 Cost to be allocated Allocated Cost 42.410 42.410 29.687 12,723 42,410

MARATHAN RUNNINGG SHOP Departmental Expense Allocation Spreadsheet For the year Ended December 31, 2019 Expense Total Advertising Administrative Shoes 200000 18000 38000 128000 6 300013780 4 410 28980 263000 21780 424100 156980 Clothing 16000 25830 41830 Direct Expenses Indirect Utilities expense L Total Dept. Exp. Service Dept. Expenses Advertising Dept. Administative Dept. Total Expenses allocated (21780) (42410) 6534 296871 193201 15246 12723 69799 263000