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.