Woh Che Co. has four departments: materials, personnel, manufacturing, and packa
ID: 2481437 • Letter: W
Question
Woh Che Co. has four departments: materials, personnel, manufacturing, and packaging. In a recent month, the four departments incurred three shared indirect expenses. The amounts of these indirect expenses and the bases used to allocate them follow.
Indirect Expense Cost Allocation Base Supervision $ 82,800 Number of employees Utilities 53,000 Square feet occupied Insurance 24,000 Value of assets in use Total $ 159,800
Departmental data for the company’s recent reporting period follow.
Department Employees Square Feet Asset Values Materials 28 39,000 $ 12,600 Personnel 7 6,500 3,150 Manufacturing 63 65,000 31,500 Packaging 42 19,500 15,750 Total 140 130,000 $ 63,000
2.
Prepare a summary table that reports the indirect expenses assigned to each of the four departments.
Explanation / Answer
#Supervision expenses are allocated on the basis of number of employees (i.e. in the ratio 28:7:63:42)
#Utilities are allocated on the basis of square feet occupied (i.e. in the ratio 39000:6500:65000:19500)
#Insurance expense is allocated on the basis of value of assets used (i.e. in the ratio 12600:3150:31500:15750)
Department Spervision Utilities Insurance Total Material 16560 15900 4800 37260 Personnel 4140 2650 1200 7990 Manufacturing 37260 26500 12000 75760 Packaging 24840 7950 6000 38790 Total 82800 53000 24000