Lucia Company has two service departments: Office and Purchasing. Total expenses for the Office is $75,000 and for Purchasing is $58,300. Expenses for the Office are allocated to operating departments based on sales. Expenses for Purchasing are allocated to operating departments based on purchase orders. Department Books Magazines Newspapers Total Sales $ 150,000 84,000 66,000 $ 300,000 Purchase Orders 1,680 945 875 3,500 Allocate the expenses from (a) the Office and (b) Purchasing to each of the company's three operating departments using the given information.

Lucia Company has two service departments: Office and Purchasing. Total expenses for the Office is $75,000 and for Purchasing is $58,300. Expenses for the Office are allocated to operating departments based on sales. Expenses for Purchasing are allocated to operating departments based on purchase orders. Department Books Magazines Newspapers Total Sales $ 150,000 84,000 66,000 $ 300,000 Purchase Orders 1,680 945 875 3,500 Allocate the expenses from (a) the Office and (b) Purchasing to each of the company's three operating departments using the given information.

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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The following is a partially completed lower section of a departmental expense allocation for Cozy Bookstore. It reports the total amounts of direct and indirect expenses allocated to its five (5) departments. Allocate the expenses of the two service departments (advertising and purchasing) to the three operating departments and provide the complete income statement. Please complete the income statement. Advertising and purchasing department expenses are allocated to operating departments on the basis of dollar sales and purchase orders, respectively. Information about the allocation bases for the three operating departments follows.
Sales for credit is $5200000