Problem 22-2B Allocation of indirect expenses to departments P2 Harmon's has two operating departments, Clothing and Shoes. Indirect expenses for the period follow. Department Clothing Shoes Total Rent Check (1) Total allocated to Shoes, $36,800 Advertising Insurance The company occupies 4,000 square feet of a rented building. In prior periods, the company divided the $92,000 of indirect expenses by 4,000 square feet to find an average cost of $23 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. Total (2) Insurance allocated to Clothing, $3,600 Square Feet 2,400 1,600 4,000 $50,000 30,000 12,000 $92,000 Sales $ 240,000 360,000 $600,000 Required 1. Allocate indirect expenses to the two departments using the allocation method used in prior periods. Value of Insured Assets $ 36,000 84,000 $120,000 Page 897 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.

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Problem 22-2B Allocation of indirect expenses to departments P2
Harmon's has two operating departments, Clothing and Shoes. Indirect expenses for the period follow.
Department
Clothing
Shoes
Total
Rent
The company occupies 4,000 square feet of a rented building. In prior periods, the company divided the $92,000 of indirect expenses by
4,000 square feet to find an average cost of $23 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.
Check (1) Total allocated to Shoes, $36,800
Advertising
Insurance
Total
(2) Insurance allocated to Clothing, $3,600
Square Feet
2,400
1,600
4,000
$50,000
30,000
12,000
$92,000
Sales
$ 240,000
360,000
$600,000
Required
1. Allocate indirect expenses to the two departments using the allocation method used in prior periods.
Value of Insured Assets
$ 36,000
84,000
$120,000
Page 897
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.
Transcribed Image Text:Problem 22-2B Allocation of indirect expenses to departments P2 Harmon's has two operating departments, Clothing and Shoes. Indirect expenses for the period follow. Department Clothing Shoes Total Rent The company occupies 4,000 square feet of a rented building. In prior periods, the company divided the $92,000 of indirect expenses by 4,000 square feet to find an average cost of $23 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. Check (1) Total allocated to Shoes, $36,800 Advertising Insurance Total (2) Insurance allocated to Clothing, $3,600 Square Feet 2,400 1,600 4,000 $50,000 30,000 12,000 $92,000 Sales $ 240,000 360,000 $600,000 Required 1. Allocate indirect expenses to the two departments using the allocation method used in prior periods. Value of Insured Assets $ 36,000 84,000 $120,000 Page 897 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.
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