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Advertising department expenses of $48,200 and purchasing department expenses of $40,200 of Cozy Bookstore are allocated...

Advertising department expenses of $48,200 and purchasing department expenses of $40,200 of Cozy Bookstore are allocated to operating departments on the basis of dollar sales and purchase orders, respectively. Information about the allocation bases for the three operating departments follows.
  

Department Sales Purchase Orders
Books $ 167,700 1,232
Magazines 89,700 756
Newspapers 132,600 812
Total $ 390,000 2,800

  
Complete the following table by allocating the expenses of the two service departments (advertising and purchasing) to the three operating departments.

Advertising Allocation Base Percent of Allocation Base Cost to be Allocated Allocated Cost
Department Numerator Denominator % of Total
Books
Magazines
Newspapers
Totals
Purchasing Allocation Base Percent of Allocation Base Cost to be Allocated Allocated Cost
Department Numerator Denominator % of Total
Books
Magazines
Newspapers
Totals
COZY BOOKSTORE
Departmental Expense Allocation Spreadsheet
Expense Totals Advertising Purchasing Books Magazines Newspapers
Total department expenses $803,000 $48,200 $40,200 $208,800 $160,600 $345,200
Service Dept. Expenses
Advertising Dept.
Purchasing Dept.
Total expenses allocated $803,000
0 0
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Answer:

Advertising Allocation Base Percent of Allocation Base Cost to be Allocated Allocated Cost
Department Sales Numerator Denominator % of Total
Books Dept 167,700 167,700 390000 43% 48200 20726
Magazines Dept 89,700 89,700 390000 23% 48200 11086
Newspapers Dept 132,600 132,600 390000 34% 48200 16388
Totals 390000 100% 48200
Purchasing Allocation Base Percent of Allocation Base Cost to be Allocated Allocated Cost
Department Number of orders Numerator Denominator % of Total
Books Dept 1232 1232 2800 44% 40200 17688
Magazines Dept 756 756 2800 27% 40200 10854
Newspapers Dept 812 812 2800 29% 40200 11658
Totals 2800 100% 40200
COZY BOOKSTORE
Departmental Expense Allocation Spreadsheet
Allocation Base Expense Totals Advertising Purchasing Books Magazines Newspapers
Total department expenses 803000 48200 40200 208800 160600 345200
Advertising Dept. -48200 20726 11086 16388
Purchasing Dept. -40200 17688 10854 11658
Total expenses allocated 803000 0 0 247214 182540
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