Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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.

image text in transcribed

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 allocated

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing Cases An Interactive Learning Approach

Authors: Mark S Beasley, Frank A. Buckless, Steven M. Glover, Douglas F Prawitt

7th Edition

0134421825, 9780134421827

More Books

Students also viewed these Accounting questions