Exercise 09-5 Departmental expense allocations LO P2 Woh Che Co. has four departments: Materials, Personnel, Manufacturing, and Packaging. In a recent month, the four departments incurred three shared indirect expenses. The amounts of these indirect expenses and the bases used to allocate them follow Indirect Expense Supervision Utilities Insurance Total Cost Allocation Base $ 82,500 Number of employees 54,000 square feet occupied 24,500 Value of assets in use $161,000 Departmental data for the company's recent reporting period follow. Employees 36 Department Materials Personnel Manufacturing Packaging Total Square Feet 49,000 14,000 56,000 21,000 140,000 A sset Values $ 6,400 3,840 32,640 21,120 $64,000 1. Use this information to allocate each of the three indirect expenses across the four departments. 2. Prepare a summary table that reports the indirect expenses assigned to each of the four departments. Use this information to allocate each of the three indirect expenses across the four departments. Allocation Base Percent of Allocation Base Numerator Denominator % of Total Cost to be Allocated Allocated Cost Supervision expenses Department Materials Personnel Manufacturing Packaging Totals Utilities Department Materials Personnel Manufacturing Packaging Totals Allocation Base Cost to be Allocated Allocated Cost P ercent of Allocation Base Numerator Denominator % of Total Insurance Allocation Base Cost to be Allocated Allocated Cost Percent of Allocation Base Numerator Denominator % of Total Department Materials Personnel Manufacturing Packaging Totals Manufacturing Packaging Total 56,000 21,000 140,000 32,640 21,120 $64,000 150 1. Use this information to allocate each of the three indirect expenses across the four departments. 2. Prepare a summary table that reports the indirect expenses assigned to each of the four departments. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a summary table that reports the indirect expenses assigned to each of the four departments. Supervision Utilities Insurance Total Materials Personnel Manufacturing Packaging Totals Required 1 Required 2 > You must prepare a return on investment analysis for the regional manager of Fast & Great Burgers. This growing chain is trying to decide which outlet of two alternatives to open. The first location (A) requires a $500,000 investment and is expected to yield annual net income of $65,000. The second location (B) requires a $200,000 investment and is expected to yield annual net income of $42,000. Compute the return on investment for each Fast & Great Burgers alternative. Using return on investment as your only criterion, which location (A or B) should the company open? (The chain currently generates an 21% return on total assets.) Complete this question by entering your answers Return on Investment Choice of Location Compute the return on investment for each Fast & Great Burgers alternative Return on Investment / Denominator 1 Average invested assets Numerator Net income ROI ROI Location A Location B Choice of Location >
