Question:
Won Han 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
|
$ 75,000
|
Number of employees
|
|
Utilities
|
60,000
|
Square feet occupied
|
|
Insurance
|
16,500
|
Value of assets in use
|
|
Total
|
$151,500
|
|
Departmental data for the company's recent reporting period follow.
|
Department
|
Employees
|
Square Feet
|
Asset Values
|
|
Materials
|
18
|
27,000
|
$ 6,000
|
|
Personnel
|
6
|
4,500
|
1,200
|
|
Manufacturing
|
66
|
45,000
|
37,800
|
|
Packaging
|
30
|
13,500
|
15,000
|
|
Total
|
120
|
90,000
|
$60,000
|
(1) Use this information to allocate each of the three indirect expenses across the four departments.
(2) Prepare a summary table that reports the indirect expenses assigned to each of the four departments.