Diaz Company is a retail store with two operating departments, Clothes and Shoes. Information follows.

The company reports the following indirect expenses for the year.

Additional information about the two departments follows.

Required

1. Allocate indirect expenses to the two operating departments.
2. Prepare departmental income statements.

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For Year Ended December 31 Clothes Shoes Sales.... $800,000 $450,000 Cost of goods sold .. Direct expenses: Wages.... Supplies used.... 497,000 291,000 125,000 88,000 20,000 10,000 Depreciation...... 28,000 17,000