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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

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

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