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 $ 13,000 26,000 130,000 15,000 Square Feet 1,710 1,710 9,500 $186,000 124, een 6,089 The advertising department developed and distributed 230 advertisements during the year. Of these, 69 promoted shoes and 161 promoted clothing. Utilities expense of $71,000 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 $71,000 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. Utilities Allocation Base Percent of Allocation Base Cost to be Allocated Allocated Cost Department Numerator Denominator % of Total Advertising Administrative Shoes Clothing Totals Advertising Allocation Base Percent of Allocation Base Cost to be Allocated Allocated Cost Numerator Denominator % of Total Department Shoes Clothing Totals

Answer 1

Allocated cost shoes clothing celties cost Allocation percent of allocation to be Rase Base 1 Department Numbratal) Denominator of allocated Total 1710 19000 Advertising Flows space 91 $ 7100096390 11000 6390 Administrative Flodi space 19000 1410 9.1 11 ODO 19000 Flow Space 50° 25 500 9500 321 19000 Flor space 6080 22120 11000 19000 loot Advertising department 230 Ads $3900 301 $13000 230 161 13000 9100 clothing Ads 1001 $13000 $ 71000 Total shoes 69 230 Total Administrative Department shoes clothing sales sales 186000 124.000 3,10,000 3,10,000 60': $26000 40% 26ooo g 15600 10400 $ 2600 Total 310.000 1001