Question

Marathon Running Shop has two service departments (advertising and administrative) and two operating departments (shoes and clothing). The table that follows shows the direct expenses incurred and square footage occupled by all four departments, as well as total sales for the two operating departments for the year 2017 Direct Expenses 10,00e 37,eee 96,000 20,eee Department Advertising Administrative Square Feet Sales 480 720 Shoes $156,400 183,600 2,580 Clothing 2,220 The advertising department developed and distributed 200 advertisements during the year. Of these, 60 promoted shoes and 140 promoted clothing. Utilities expense of $80,000 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 $80,000 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 Cost to be Utilities Allocated Cost Allocation Base Percent of Allocation Base Allocated Numerator Denominator% of Total Department Advertising Administrative 0 Shoes 0 0 Clothing 0 Totals Cost to be Percent of Allocation Base Advertising Allocation Base Allocated Cost Allocated Denominator% of Total Department Numerator Shoes 0 Clothing 0 0 Totals Cost to be Percent of Allocation Base Administrative Allocation Base Allocated Cost Allocated Numerator Denominator% of Total Department Shoes Clothing 0 Totals MARATHON RUNNING SHOP Departmental Expense Allocation Spreadsheet For Year Ended December 31, 2017 Advertising Administrativ&hoes Expense Totals Clothing Direct expense Indirect utilities expenses 0 Total dept. exp. 0 0 0 Service Dept. Expenses Advertising Dept. Administrative Dept 0 $ $ 0 0 Total expenses allocated

Answer 1

Answers

Utilities	Allcocation base	Numerator	Denominator	% of total	Cost to be allocated	Allocated Cost
Department:	Square feet
Advertising	Square feet	480	6000	8%	$80,000	$6,400
Administrative	Square feet	720	6000	12%	$80,000	$9,600
Shoes	Square feet	2580	6000	43%	$80,000	$34,400
Clothing	Square feet	2220	6000	37%	$80,000	$29,600
Totals		6000		100%		$80,000
Advertising	Allcocation base	Numerator	Denominator	% of total	Cost to be allocated	Allocated Cost
Department:	No. of ads
Shoes	No. of ads	60	200	30%	$16,400	$4,920
Clothing	No. of ads	140	200	70%	$16,400	$11,480
Totals		200		100%		$16,400
Administrative	Allcocation base	Numerator	Denominator	% of total	Cost to be allocated	Allocated Cost
Department:	Amount of sales
Shoes	Amount of sales	156400	340000	46%	$46,600	$21,436
Clothing	Amount of sales	183600	340000	54%	$46,600	$25,164
Totals		340000		100%		$46,600

	Expense Totals	Advertising	Administrative	Shoes	Clothing
Direct Expenses	$163,000	$10,000	$37,000	$96,000	$20,000
Indirect Utilities expense	$80,000	$6,400	$9,600	$34,400	$29,600
Total Dept Expense	$243,000	$16,400	$46,600	$130,400	$49,600
Service Depart Expenses:
Advertising Dept	$0	($16,400)		$4,920	$11,480
Administrative dept	$0		($46,600)	$21,436	$25,164
Total Expense allocated	$243,000	$0	$0	$156,756	$86,244