1)

Pepper Department store allocates its service department expenses to its various operating (sales) departments. The following data is available for its service departments:

Expense	Basis for allocation	Amount
Rent	Square feet of floor space	$45,000
Advertising	Amount of dollar sales	$72,000
Administrative	Number of employees	$108,000

The following information is available for its three operating (sales) departments:

Department	Square Feet	Dollar Sales	Number of employees
A	5,100	$343,000	27
B	5,500	$363,000	29
C	5,700	$504,000	31
Totals	16,300	$1,210,000	87

What is the total advertising expense allocated to Department C?

$72,000.

$29,990 .

$33,490.

$31,790.

$13,800.

2)

Fallow Corporation has two separate profit centers. The following information is available for the most recent year:

	West Division	East Division
Sales (net)	$300,000	$450,000
Salary expense	36,000	50,000
Cost of goods sold	110,000	215,000

The West Division occupies 7,500 square feet in the plant. The East Division occupies 4,500 square feet. Rent, which was $ 60,000 for the year, is an indirect expense and is allocated based on square footage. Compute operating income for the West Division.

$162,500.

$125,000.

$124,000.

$116,500.

$101,500.

3)

Carter Company reported the following financial numbers for one of its divisions for the year; average total assets of $4,140,000; sales of $4,565,000; cost of goods sold of $2,590,000; and operating expenses of $1,412,000. Assume a target income of 8% of average invested assets. Compute residual income for the division:

$45,040.

$241,800.

$158,000.

$189,300.

$231,800.

4)

Pleasant Hills Properties is developing a golf course subdivision that includes 225 home lots; 100 lots are golf course lots and will sell for $113,000 each; 125 are street frontage lots and will sell for $83,000. The developer acquired the land for $1,980,000 and spent another $1,580,000 on street and utilities improvement. Compute the amount of joint cost to be allocated to the street frontage lots using value basis. (Round your intermediate calculation to one decimal place.)

$2,148,880.

$1,907,880.

$1,854,760.

$1,552,040.

$1,705,240.

5)

The following is a partially completed lower section of a departmental expense allocation spreadsheet for Brickland. It reports the total amounts of direct and indirect expenses for the four departments. Purchasing department expenses are allocated to the operating departments on the basis of purchase orders. Maintenance department expenses are allocated based on square footage.

	Purchasing	Maintenance	Fabrication	Assembly
Operating costs	$34,000	$19,200	$98,000	$64,000
No. of purchase orders			14	6
Sq.ft. of space			3,400	2,600

Required:

Compute the amount of Purchasing department expense to be allocated to Assembly.

$15,300.

$10,880.

$23,800.

$8,320.

$10,200.