Exercise 9-6 (Algo) Departmental expense allocations LO P2 Gomez Company has two service departments (Personnel and Office) and two operating departments (Shoes and Clothing). Following are the direct expenses and square feet occupied by the four departments, and the total sales for the two operating departments. Department Sales Personnel Office Shoes Clothing Direct Expenses Square Feet $ 15,000 22,000 118,000 1,540 19,000 700 5,180 6,580 $ 145,600 114,400 The company also has $66,000 of utilities expense, which is an indirect expense to all departments and is allocated to the four departments based on square feet occupied. The Shoes department has 23 employees and the Clothing department has 207 employees. Personnel expense is allocated to operating departments based on the number of employees. Office expense is allocated to operating departments based on sales. 1. Allocate utilities expense to the four departments. 2. Allocate personnel expense to the Shoes and Clothing departments. 3. Allocate office expense to the Shoes and Clothing departments. Utilities Department Personnel Office Shoes Clothing Totals Personnel expense Allocation Base Square feet occupied Percent of Allocation Base Cost to be Allocated Allocated Cost Numerator Denominator % of Total 1,540 1,540 14,000 11.00% $ 66,000 $ 7,260 700 700 14,000 5.00% 66,000 3,300 5,180 5,180 14,000 37.00% 66,000 24,420 6,580 6,580 14,000 47.00% 66,000 31,020 14,000 100.00% $ 66,000 Allocation Base Percent of Allocation Base Cost to be Allocated Allocated Cost Department Number of employees Numerator Denominator % of Total Shoes Clothing Totals 0 0 0 Office expense Allocation Base Percent of Allocation Base Cost to be Allocated Allocated Cost Department Numerator Denominator % of Total Shoes 0 Clothing 0 Totals 0