Dunnes Stores has two service department, Advertising and Administration, and two operating departments, Hardware and Automotive. Sales, COGS, and direct expenses are given below. Complete the following table, including allocation of $220,000 of indirect costs. Indirect costs are allocated on the basis of square footage:... Advertising Department:750 square feet, Administration Department:1,500 square feet, Hardware Department: 3,000 square feet, Automotive Department: 9,750 square feet
Dunnes Stores |
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Revenues and Expenses |
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Y/E December 31, 2018 |
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Service Departments |
Operating Departments |
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Totals |
Advertising |
Admin |
Hardware |
Automotive |
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Sales |
1,500,000 |
$675,000 |
$825,000 |
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COGS |
375,000 |
100,000 |
275,000 |
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Direct Expenses |
275,000 |
50,000 |
100,000 |
50,000 |
75,000 |
Indirect Expenses |
220,000 |
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Totals |
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Allocated Service Dept. Expenses |
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Dept. Name |
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Dept. Name |
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Total Expenses Allocated to Operating Depts. |
Use the table above to allocate the service department expenses to the operating departments. Advertising Costs are allocated on the basis of number of advertisements in each department. Hardware had 60 ads and Automotive had 90. Administrative costs are allocated on the basis of sales. Complete the following Departmental Income Statement
Dunnes Stores |
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Departmental Income Statement |
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Y/E December 31, 2018 |
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Hardware |
Automotive |
Combined |
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Sales |
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Cost of Goods Sold |
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Gross Profit |
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Operating Expenses |
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Direct Expenses |
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Indirect Expenses |
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Share of Advertising Expenses |
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Share of Admin Expenses |
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Total Operating Expenses |
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Operating Income (Loss) |
Complete the following Income Statement showing Departmental Contribution to Overhead
Dunnes Stores |
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Income Statement Showing Departmental Contribution to Overhead |
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Y/E December 31, 2018 |
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Hardware |
Housewares |
Combined |
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Sales |
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Cost of Goods Sold |
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Gross Profit |
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Direct Expenses |
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Departmental Contribution to Overhead |
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Indirect Expenses |
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Share of Advertising Expenses |
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Share of Administrative Expenses |
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Total Operating Expenses |
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Operating Income (Loss) |
Dunnes Stores | |||||
Revenues and Expenses | |||||
Y/E December 31, 2018 | |||||
Totals | Service Departments | Operating Departments | |||
Advertising | Admin | Hardware | Automotive | ||
Sales | $ 1,500,000.00 | $ 675,000.00 | $ 825,000.00 | ||
COGS | $ 375,000.00 | $ 100,000.00 | $ 275,000.00 | ||
Direct Expenses | $ 275,000.00 | $ 50,000.00 | $ 100,000.00 | $ 50,000.00 | $ 75,000.00 |
Indirect Expenses | $ 220,000.00 | $ 11,000.00 | $ 22,000.00 | $ 44,000.00 | $ 143,000.00 |
Totals | $ 2,370,000.00 | $ 61,000.00 | $ 122,000.00 | $ 869,000.00 | $ 1,318,000.00 |
Allocated Service Dept. Expenses | $ 61,000.00 | $ 122,000.00 | |||
Advertising Department | $ (61,000.00) | $ 36,600.00 | $ 24,400.00 | ||
Admin Department | $ (122,000.00) | $ 54,900.00 | $ 67,100.00 | ||
Total Expenses Allocated to Operating Depts. | $ 91,500.00 | $ 91,500.00 |
Dunnes Stores | |||
Income Statement Showing Departmental Contribution to Overhead | |||
Y/E December 31, 2018 | Hardware | Automotive | Combined |
Sales | $ 675,000.00 | $ 825,000.00 | $ 1,500,000.00 |
COGS | $ 100,000.00 | $ 275,000.00 | $ 375,000.00 |
Gross Profit | $ 575,000.00 | $ 550,000.00 | $ 1,125,000.00 |
Direct Expenses | $ 50,000.00 | $ 75,000.00 | $ 125,000.00 |
Departmental Contribution to Overhead | $ 525,000.00 | $ 475,000.00 | $ 1,000,000.00 |
Indirect Expenses | $ 44,000.00 | $ 143,000.00 | $ 187,000.00 |
Share of Advertising Expenses | $ 36,600.00 | $ 24,400.00 | $ 61,000.00 |
Share of Admin Expenses | $ 54,900.00 | $ 67,100.00 | $ 122,000.00 |
Total Operating Expenses | $ 185,500.00 | $ 309,500.00 | $ 495,000.00 |
Operating Income | $ 389,500.00 | $ 240,500.00 | $ 630,000.00 |
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