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Problem 2 2 - 2 A ( Algo ) Allocation of indirect expenses to departments LO P 2 Skip to question [ The following information

Problem 22-2A (Algo) Allocation of indirect expenses to departments LO P2
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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 22-2A (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.

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