Prepare a working paper to compute the non-traceable expenses of $300,000 to the
ID: 2335182 • Letter: P
Question
Prepare a working paper to compute the non-traceable expenses of $300,000 to the chemicals segment and the sporting goods segment of Big Red Company. Allocate to the two segments on the basis of the arithmetic average of the percentage of net sales, payroll taxes, and average plant assets and inventories applicable to each segment:
Account
Chemical Segment
Sporting Goods Segment
Net Sales
$600,000
$1,400,000
Payroll Totals
$150,000
$100,000
Average plants assets/inventories
$710,000
$290,000
Non-traceable expenses
Account
Chemical Segment
Sporting Goods Segment
Net Sales
$600,000
$1,400,000
Payroll Totals
$150,000
$100,000
Average plants assets/inventories
$710,000
$290,000
Non-traceable expenses
Explanation / Answer
Ans-
So Amount Allocated to Chemical Segment is $ 16,100 and For Sporting Goods Segment is $ 13,900 for non-traceable expenses.
Amount Percentage Account Chemical Segment Sporting Goods Segment TOTAL Chemical Segment Sporting Goods Segment Total Net Sales $ 600,000.00 $ 1,400,000.00 $ 2,000,000.00 30% 70% 100% Payroll Totals $ 150,000.00 $ 100,000.00 $ 250,000.00 60% 40% 100% Average plants assets/inventories $ 710,000.00 $ 290,000.00 $ 1,000,000.00 71% 29% 100% Total 161% 139% 300% Average 53.67% 46.33% 100% Allocation of non-traceable expenses of $300,000 $ 16,100.00 $ 13,900.00