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Marathon Running Shop has two service departments (advertising and administrative) and two operating departments (shoes and clothing). The table that follows shows the direct expenses
Marathon Running Shop has two service departments (advertising and administrative) and two operating departments (shoes and clothing). The table that follows shows the direct expenses incurred and square footage occupied by all four departments, as well as total sales for the two operating departments for the year 2017. 017 Direct Expenses $ 20,000 Square Feet 1,680 Sales Department Advertising Administrative 30,000 1,260 10,290 128,000 19,000 Shoes $179,800 Clothing 7,770 130,200 The advertising department developed and distributed 130 advertisements during the year. Of these, 26 promoted shoes and 104 promoted clothing. Utilities expense of $75,000 is an indirect expense to all departments. Complete a departmental expense allocation spreadsheet for Marathon Running Shop. The spreadsheet should assign (1) direct expenses to each of the four departments, (2) the $75,000 of utilities expense to the four departments on the basis of floor space occupied, (3) the advertising department's expenses to the two operating departments on the basis of the number of ads placed that promoted a department's products, and (4) the administrative department's expenses to the two operating departments based on the amount of sales. Cost to be Allocated Percent of Allocation Base Allocation Base Utilities Allocated Cost Numerator Denominator% of Total Floor space occupied Department 8.00 75,000 S Advertising 1,680 1,680 21,000 6,000 Administrative 1,260 1,260 21,000 6.00 75,000 4,500 75,000 Shoes 10,290 10,290 21,000 49.00 36,750 Clothing 7,770 21,000 37.00 75,000 7,770 27,750 100.00 Totals 21,000 75,000 Cost to be Allocated Percent of Allocation Base Advertising Allocation Base Allocated Cost Numerator Denominator% of Total. Department Number of ads Cost to be Advertising Percent of Allocation Base Allocation Base Allocated Cost Allocated Numerator Denominator% of Total Number of ads Department 130 179,800 Shoes 26 26 20.00 104 Clothing 130 104 80.00 179,800 $ 130 100.00 179,800 Totals Cost to be Allocated Cost Percent of Allocation Base Administrative Allocation Base Allocated Numerator Denominator% of Total Department Sales S $179,800 58.00 $ Shoes 179,800 34,500 20,010 310,000 34,500 Clothing 130,200 130,200 310,000 42.00 14,490 100.00 Totals 310,000 34,500 MARATHON RUNNING SHOP Departmental Expense Allocation Spreadsheet For Year Ended December 31, 2017 Advertising Administrativ8hoes Expense Tota ls Clothing $ 128,000 197,000 20,000 $30,000 $ Direct expense 19,000 Indirect utilities expenses 4,500 36,750 75,000 6,000 27,750 Total dept. exp 272,000 26,000 34,500 164,750 46,750 Service Dept. Expenses Advertising Dept 0 Administrative Dept. $ 46,750 272,000 26,000 34,500 Total expenses allocated 164,750
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