Exercise 22-5 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		Cost	Allocation Base
Supervision	$	82,800	Number of employees
Utilities		53,000	Square feet occupied
Insurance		24,000	Value of assets in use
Total	$	159,800

Departmental data for the companys recent reporting period follow.

Department	Employees				Square Feet				Asset Values
Materials		28				39,000				$	12,600
Personnel		7				6,500					3,150
Manufacturing		63				65,000					31,500
Packaging		42				19,500					15,750
Total		140				130,000				$	63,000

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.

Supervision expenses	Allocation Base	Percent of Allocation Base			Cost to be Allocated	Allocated Cost
Department		Numerator	Denominator	% of Total
Materials
Personnel
Manufacturing
Packaging
Totals
Utilities	Allocation Base	Percent of Allocation Base			Cost to be Allocated	Allocated Cost
Department		Numerator	Denominator	% of Total
Materials
Personnel
Manufacturing
Packaging
Totals
Insurance	Allocation Base	Percent of Allocation Base			Cost to be Allocated	Allocated Cost
Department		Numerator	Denominator	% of Total
Materials
Personnel
Manufacturing
Packaging
Totals

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