Question - Marathon Running Shop has two service departments (advertising and administrative) and two operating departments (shoes and clothing) During 2015. the departments had the following direct expenses and occupied the following amount of floor space
|
Department
|
Direct Expenses
|
Square Feet
|
|
Advertising
|
$15,000
|
500
|
|
Administrative
|
27,000
|
700
|
|
Shoes
|
103,000
|
4,100
|
|
Clothing
|
13,000
|
4,700
|
The advertising department developed and distributed 190 advertisements during the year. Of these. 38 promoted shoes and 152 promoted clothing The store sold $310.000 of merchandise during the year Of this amount. 5124.000 is from the shoes department, and $186.000 is from the clothing department The utilities expense of $74.000 is an indirect expense to all departments
Complete a departmental expense allocation spreadsheet for Marathon Running Shop. The spreadsheet should assign (1) direct expenses to each of the four departments. (2) the 574 000 of utilities expense to the four departments on the basis of floor space occupied. (3) the advertising department's expenses to the two operating departments on the basis of the number of ads placed that promoted a department's products. and (4) the administrative department s expenses to the two operating departments based on the amount of sales.