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! Required information [The following information applies to the questions displayed below.] National Retail has two departments, Housewares and Sporting. Indirect expenses for the
! Required information [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 10,000 $ 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 Value of Insured Assets $ 43,000 57,000 Square Feet 2,080 1,920 4,000 Sales $ 210,000 290,000 $ 500,000 $ 100,000 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. Allocate $45,000 of rent using square feet occupied Housewares Sporting Total Square Footage Percent of Total Cost Allocated Allocate $25,000 of advertising using percentage of sales Housewares Sporting Total Sales $ 0 0% $ 0 Percent of Total Cost Allocated 0% $ 0 Allocate $10,000 of insurance using value of insured assets Housewares Sporting Total Assets Insured Percent of Total Cost Allocated 0 0% $ 0
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