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A company has two departments, Y and Z that incur wage expenses. An analysis of the...

A company has two departments, Y and Z that incur wage expenses. An analysis of the total wage expense of $44,000 indicates that Dept. Y had a direct wage expense of $7,000 and Dept. Z had a direct wage expense of $11,000. The remaining expenses are indirect and analysis indicates they should be allocated evenly between the two departments. Departmental wage expenses for Dept. Y and Dept. Z, respectively, are:

Multiple Choice

  • $13,000; $13,000.

  • $24,000; $20,000.

  • $22,000; $22,000.

  • $7,000; $11,000.

  • $20,000; $24,000.

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Answer #1
Total wage expenses $44,000
Less: Direct wage expenses ( $7,000 + $11,000) $18,000
Indirect expenses $26,000

It is given that indirect wage expense - $26,000 should be allocated evenly between two departments.

So $26,000 / 2 = $13,000 has to be allocated for each dept.

Therefore departmental wage expenses for Dept. Y and Dept Z are as follows:

Dept. Y Dept. Z
Direct wage expense $7,000 $11,000
Indirect wage expense $13,000 $13,000
Departmental wage expense $20,000 $24,000

Hence correct option is $20,000 ; $24,000

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