Problem 9-2A (Algo) Allocation of indirect expenses to departments LO P2 (The following information applies to the questions displayed below.) National Retail has two departments, Housewares and Sporting. Indirect expenses for the period follow. Rent Advertising Insurance Total $ 45,000 25,000 1 , $ 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 Housewares Sporting Total Square Feet 1,640 2,360 4,000 Sales $ 320,000 180,000 $ 500,000 Value of Insured Assets $ 54,000 46,000 $ 100,000 Problem 9-2A (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. Cost Allocated Allocate $45,000 of rent using square feet occupied Square Feet Percent of Total Housewares Sporting Total Allocate $25,000 of advertising using percentage of sales Sales Percent of Total Housewares Cost Allocated Sporting Total Allocate $10,000 of insurance using value of insured assets Assets Insured Percent of Total Cost Allocated Housewares Sporting Total