Question

Prepare a working paper to compute the non-traceable expenses of $300,000 to the chemicals segment and the sporting goods segment of Big Red Company. Allocate to the two segments on the basis of the arithmetic average of the percentage of net sales, payroll taxes, and average plant assets and inventories applicable to each segment:

Account	Chemical Segment	Sporting Goods Segment
Net Sales	$600,000	$1,400,000
Payroll Totals	$150,000	$100,000
Average plants assets/inventories	$710,000	$290,000
Non-traceable expenses

Answer 1

Ans-

	Amount			Percentage
Account	Chemical Segment	Sporting Goods Segment	TOTAL	Chemical Segment	Sporting Goods Segment	Total
Net Sales	$   600,000.00	$               1,400,000.00	$ 2,000,000.00	30%	70%	100%
Payroll Totals	$   150,000.00	$                  100,000.00	$      250,000.00	60%	40%	100%
Average plants assets/inventories	$   710,000.00	$                  290,000.00	$ 1,000,000.00	71%	29%	100%
			Total	161%	139%	300%
			Average	53.67%	46.33%	100%
Allocation of non-traceable expenses of $300,000				$              16,100.00	$                           13,900.00

So Amount Allocated to Chemical Segment is $ 16,100 and For Sporting Goods Segment is $ 13,900 for non-traceable expenses.