Question

Exercise 22-5 Departmental expense allocations LO P2 Woh Che Co. has four departments: materials, personnel, manufacturing, a
1. Use this information to allocate each of the three indirect expenses across the four departments. table that reports the i
Utilities Cost to be Allocated Allocated Cost Department Materials Personnel Manufacturing Packaging Totals Allocation Base P
2. Prepare a summary table that reports the indirect expenses assigned to each of the four departments. Complete this questio
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Solution:
1)
Supervision expenses Allocation Base Percent of Allocation Base Cost to be allocated Allocated Cost
Numerator Denominator % of Total (Cost to be allocated *Numerator/Denominator)
Department Number of Employees
Material 36 36 180 20% $84,300 $16,860
Personnel 9 9 180 5% $84,300 $4,215
Manufacturing 72 72 180 40% $84,300 $33,720
Packaging 63 63 180 35% $84,300 $29,505
Totals 180 100% $84,300
Utilities Allocation Base Percent of Allocation Base Cost to be allocated Allocated Cost
Numerator Denominator % of Total (Cost to be allocated *Numerator/Denominator)
Department Square Feet occupied
Material 52500 52500 175000 30% $68,000 $20,400
Personnel 17500 17500 175000 10% $68,000 $6,800
Manufacturing 78750 78750 175000 45% $68,000 $30,600
Packaging 26250 26250 175000 15% $68,000 $10,200
Totals 175000 100% $68,000
Insurance Allocation Base Percent of Allocation Base Cost to be allocated Allocated Cost
Numerator Denominator % of Total (Cost to be allocated *Numerator/Denominator)
Department Value of Asset in use
Material 11700 11700 78000 15% $31,500 $4,725
Personnel 3900 3900 78000 5% $31,500 $1,575
Manufacturing 47580 47580 78000 61% $31,500 $19,215
Packaging 14820 14820 78000 19% $31,500 $5,985
Totals 78000 100% $31,500
2)
Supervision expenses Utilities Insurance Total
Material $                     16,860 $      20,400 $       4,725 $   41,985
Personnel $                       4,215 $        6,800 $       1,575 $   12,590
Manufacturing $                     33,720 $      30,600 $     19,215 $   83,535
Packaging $                     29,505 $      10,200 $       5,985 $   45,690
Totals $                     84,300 $      68,000 $     31,500 $ 183,800
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