managerial accounting chapter 11

15 BIU A E E E Merge & Center fx Please complete the Exercises as follows: x BCDEFA Please complete the Exercises as follows: 1) Expert Garage pays $120,000 rent each year for its two-story building. The cost is to be allocated because it is considered to be al traceable expense. The space in this building is occupied by five departments as specified here. Paint department Engine department Window department Electrical department Accessory department 1,200 square feet of first floor space 3,600 square feet of first floor space 1,920 square feet of second-floor space 1,056 square feet of second floor space 1,824 square feet of second floor space The company allocates 65% of total rent expense to the first floor and 35% to the second floor, and then allocates rent expense for each floor to the departments occupying that floor on the basis of space occupied. Determine the rent expense to be allocated to each department. (Round percents to the nearest one-tenth and dollar amounts to the nearest whole dollar.) 2) The following is a partially completed lower section of a departmental expense allocation spreadsheet for Haston Bookstore. It reports the total amounts of direct and indirect expenses allocated to its five departments. Complete the spreadsheet by allocating the expenses of the two service departments (advertising and purchasing) to the three operating departments. Allocation of Expenses to Departments Allocation Base Expense Account Balance $ 653,000 Advertising Dept. Advertising Dept. $ 23,000 Purchasing Dept. $ 30,000 Books Dept. $ 426,000 Magarines Dept. Newspaper Dept $ 85,000 $ 89,000 Total department expense Service department expenses Advertising dept.-Sales Purchasing dept.-P.O.'s Totul exp. Allocated to opening dept's 1 . . - Advertising and purchasing department expenses are allocated to operating departments on the basis of dollar sales and purchase orders, respectively. Information about the allocation bases for three operating departments follows. Department Books Magazines Newspapers Total Sales Purchase Orders $ 440,000 400 160,000 250 200,000 350 800,000INN 1000 Check: Total expenses allocated Books Dept., S450,650