Problem $22-2$A $($Algo$)$ Allocation of indirect expenses to departments LO P$2$

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National Retail has two departments, Housewares and Sporting.

Indirect expenses for the period follow.

Rent $ $45,000$

Advertising $25,000$

Insurance $10,000$

Total $ $80,000$

The company occupies $4,000$ square feet of a rented building. In prior periods, the company divided the $$80,000$ of indirect expenses by $4,000$ square feet to find an average cost of $$20$ per square foot, and then allocated indirect expenses to each department based on the square feet it occupied.

The company now wants to allocate indirect expenses using the allocation bases shown below.

Department Square Feet Sales Value of Insured Assets

Housewares $2,080$ $ $210,000$ $ $43,000$

Sporting $1,920290,00057,000$

Total $4,000$ $ $500,000$ $ $100,000$

Problem $22-2$A $($Algo$)$ Part $2$

$2.$ Allocate indirect expenses to the two departments. Rent expense is allocated based on square feet occupied. Advertising expense is allocated based on total sales. Insurance expense is allocated based on the value of insured assets.