Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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 2019.

Department Direct Expenses Square Feet Sales
Advertising $ 16,000 1,800
Administrative 35,000 750
Shoes 128,000 4,500 $ 204,000
Clothing 10,000 7,950 136,000

The advertising department developed and distributed 130 advertisements during the year. Of these, 26 promoted shoes and 104 promoted clothing. Utilities expense of $79,000 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 $79,000 of utilities expense to the four departments on the basis of floor space occupied, (3) the advertising departments expenses to the two operating departments on the basis of the number of ads placed that promoted a departments products, and (4) the administrative departments expenses to the two operating departments based on the amount of sales.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing Practices In Local Governments An International Comparison

Authors: Laurence Ferry, Pasquale Ruggiero

1st Edition

180117086X, 978-1801170864

More Books

Students also viewed these Accounting questions