Exercise 9-5 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	$	84,200	Number of employees
Utilities		67,000	Square feet occupied
Insurance		31,000	Value of assets in use
Total	$	182,200

Departmental data for the companys recent reporting period follow.

Department	Employees				Square Feet				Asset Values
Materials		34				41,250				$	11,550
Personnel		17				8,250					3,080
Manufacturing		68				90,750					46,200
Packaging		51				24,750					16,170
Total		170				165,000				$	77,000

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