[The following information applies to the questions displayed below.]National Retail has two departments, Housewares and Sporting.Indirect expenses for the period follow.Rent $ 45,000Advertising 25,000Insurance 10,000Total $ 80,000The company occupies 4,000 square feet of a rented building. In prior periods, the company divided the $80,000 ofindirect expenses by 4,000 square feet to find an average cost of $20 per square foot, and then allocated indirectexpenses to each department based on the square feet it occupied.The company now wants to allocate indirect expenses using the allocation bases shown below.Department Square Feet Sales Value of Insured AssetsHousewares 1,840$ 270,000 $ 49,000Sporting 2,160230,000Total 4,000$ 500,000 $100,0002. 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.Allocate $45,000 of rent using square feet occupiedHousewaresSportingTotalAllocate $25,000 of advertising using percentage of salesHousewaresSportingTotal51,000Allocate $10,000 of insurance using value of insured assetsHousewaresSportingTotalSquare Footage Percent of Total Cost Allocated1,8402,1604,000Sales$00%$0Percent of Total Cost Allocated0%$20,70024,300$45,000Assets Insured Percent of Total Cost Allocated$4,9005,1000%$13,50011,500$25,000$10,000

Indirect expenses are those expenses which are not related with production and which are not…

National Retail has two departments, Housewares and Sporting. Indirect expenses for the period follow. Rent $ 45,000 Advertising 25,000 Insurance 10,000 Total $ 80,000 The company occupies 4,000 square feet of a rented building. In prior periods, the company divided the $80,000 of indirect expenses by 4,000 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 shown below.

National Retail has two departments, Housewares and Sporting. Indirect expenses for the period follow. Rent $ 45,000 Advertising 25,000 Insurance 10,000 Total $ 80,000 The company occupies 4,000 square feet of a rented building. In prior periods, the company divided the $80,000 of indirect expenses by 4,000 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 shown below.

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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