Question
Gomez Company has two service departments (Personnel and Office) and two operating departments (Shoes and Clothing). Following are the direct expenses and square feet
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 Personnel Office Shoes Clothing Direct Expenses Square Feet Sales $ 18,000 25,000 103,000 15,000 1,120 1,400 7,140 4,340 $ 273,000 77,000 The company also has $64,000 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 9 employees and the Clothing department has 3 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. Cost Utilities Department Allocation Base Square feet occupied Percent of Allocation Base Cost to be Allocated Allocated Numerator Denominator % of Total Personnel Office 1,120 1,400 14,000 14,000 8.00% $ 64,000 10.00% 64,000 Shoes 0 64,000 0 Clothing 0 64,000 Totals 0 $ 64,000 Personnel expense Allocation Base Department Numerator Percent of Allocation Base Denominator Cost to be Allocated Cost Allocated % of Total Shoes 0 0 Cost to be Allocated i Cost Allocated Clothing Totals Office expense Allocation Base Percent of Allocation Base Department Numerator Denominator % of Total Shoes 0 Clothing 0 Totals
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