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American Retail has two departments, Housewares and Sporting. Indirect expenses for the period follow. $ 90,000 50,000 20,000 $ 160,000 Rent Advertising Insurance Total The company occupies 8,000 square feet of a rented building. In prior periods, the company divided the $160,000 of indirect expenses by 8,000 square feet to find an average cost of $20 per square foot, and then allocated indirect expenses to each department based on the square feet it occupied The company now wants to allocate indirect expenses using the allocation bases below. Department Housewares Sporting Total Square Feet 4,400 3,600 8,000 Sales $360,000 640,000 $ 1,000,000 Value of Insured Assets $ 80,000 120,000 $ 200,000

American Retail has two departments, Housewares and Sporting. Indirect expenses for the period follow. $ 90,000 50,000 20,000 $ 160,000 Rent Advertising Insurance Total The company occupies 8,000 square feet of a rented building. In prior periods, the company divided the $160,000 of indirect expenses by 8,000 square feet to find an average cost of $20 per square foot, and then allocated indirect expenses to each department based on the square feet it occupied The company now wants to allocate indirect expenses using the allocation bases below. Department Housewares Sporting Total Square Feet 4,400 3,600 8,000 Sales $360,000 640,000 $ 1,000,000 Value of Insured Assets $ 80,000 120,000 $ 200,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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American Retail has two departments, Housewares and Sporting. Indirect expenses for the period follow. $ 90,000 50,000 20,000 $ 160,000 Rent Advertising Insurance Total The company occupies 8,000 square feet of a rented building. In prior periods, the company divided the $160,000 of indirect expenses by 8,000 square feet to find an average cost of $20 per square foot, and then allocated indirect expenses to each department based on the square feet it occupied The company now wants to allocate indirect expenses using the allocation bases below. Department Housewares Sporting Total Square Feet 4,400 3,600 8,000 Sales $360,000 640,000 $ 1,000,000 Value of Insured Assets $ 80,000 120,000 $ 200,000 Required: 1. Allocate indirect expenses to the two departments using the allocation method used in prior periods. 2. Allocate indirect expenses to the two departments. Rent expense is allocated based on square feet occupied. Advertising expense is allocated based on total sales. Insurance expense is allocated based on the value of insured assets. Please submit your file attachment response in one of the approved file formats; Word file (.doc or .docx), Excel file (.xls or .xlsx), or PDF. To submit photo or image files please paste them into Word or PDF. Consult with your instructor as needed on their preferred file attachment format.
Transcribed Image Text:American Retail has two departments, Housewares and Sporting. Indirect expenses for the period follow. $ 90,000 50,000 20,000 $ 160,000 Rent Advertising Insurance Total The company occupies 8,000 square feet of a rented building. In prior periods, the company divided the $160,000 of indirect expenses by 8,000 square feet to find an average cost of $20 per square foot, and then allocated indirect expenses to each department based on the square feet it occupied The company now wants to allocate indirect expenses using the allocation bases below. Department Housewares Sporting Total Square Feet 4,400 3,600 8,000 Sales $360,000 640,000 $ 1,000,000 Value of Insured Assets $ 80,000 120,000 $ 200,000 Required: 1. Allocate indirect expenses to the two departments using the allocation method used in prior periods. 2. Allocate indirect expenses to the two departments. Rent expense is allocated based on square feet occupied. Advertising expense is allocated based on total sales. Insurance expense is allocated based on the value of insured assets. Please submit your file attachment response in one of the approved file formats; Word file (.doc or .docx), Excel file (.xls or .xlsx), or PDF. To submit photo or image files please paste them into Word or PDF. Consult with your instructor as needed on their preferred file attachment format.
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