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 departments. Allocate the expenses of the two service departments (advertising and purchasing) to the three operating departments and provide the complete 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.
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 departments. Allocate the expenses of the two service departments (advertising and purchasing) to the three operating departments and provide the complete 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.
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 departments. Allocate the expenses of the two service departments (advertising and purchasing) to the three operating departments and provide the complete 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.
Transcribed Image Text:Allocatlon of Expenses to Departments
Еxpense
Account Bal.
Advertising
Dept.
Purchasing
Dept.
Books
Magazines
Dept.
Newspapers
Dept.
Allocation Base
Dept.
$698,000
$24,000
$34,000
$425,000
$90,000
$125,000
Total department expenses .
Service department expenses
Advertising department.
Purchasing department..
Total expenses allocated to
operating departments .
Sales
.Purch. orders
Transcribed Image Text:Department
Sales
Purchase Orders
Books ...
$495,000
516
Magazines..
198,000
360
Newspapers
207,000
324
Total.....
$900,000
1,200
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