Question
Coconut Shop has an advertising and administrative departments (service departments) and shoes and clothing departments (two operating departments). The below table list the direct expenses
Coconut Shop has an advertising and administrative departments (service departments) and shoes and clothing departments (two operating departments). The below table list the direct expenses incurred along with the square footage occupied by all the departments. The two operating departments' total sales for 2017 are included below.
Department | Direct Expenses | Square Feet | Sales | ||||||||
Advertising | $ | 19,000 | 850 | ||||||||
Administrative | 34,000 | 1,530 | |||||||||
Shoes | 112,000 | 5,780 | $ | 121,800 | |||||||
Clothing | 17,000 | 8,840 | 168,200 | ||||||||
The advertising department developed and distributed 200 advertisements during the year. Of these, 20 promoted shoes and 180 promoted clothing. Utilities expense of $50,000 is an indirect expense to all departments. Complete a departmental expense allocation spreadsheet for Coconut Shop. The spreadsheet should assign (1) direct expenses to each of the four departments, (2) the $50,000 of utilities expense to the four departments on the basis of floor space occupied, (3) the advertising departments expenses to the two operating departments on the basis of the number of ads placed that promoted a departments products, and (4) the administrative departments expenses to the two operating departments based on the amount of sales.
Utilities Allocation Base Percent of Allocation Base Cost to be Allocated Allocated Cost Department Numerator Denominator % of Total Advertising Administrative Shoes Clothing Totals Advertising Allocation Base Percent of Allocation Base Cost to be Allocated Allocated Cost Department Numerator Denominator % of Total Shoes Clothing Totals Administrative Allocation Base Percent of Allocation Base Cost to be Allocated Allocated Cost Department Numerator Denominator % of Total Shoes Clothing Totals COCONUT SHOP Departmental Expense Allocation Spreadsheet For Year Ended December 31, 2017 Expense Totals Advertising Administrative Shoes Clothing Direct expense Indirect utilities expenses Total dept. exp. Service Dept. Expenses Advertising Dept. Administrative Dept. Total expenses allocatedStep by Step Solution
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