Exercise 22-5 Departmental expense allocations LO P2Woh Che Co. has four departments: Materials, Personnel, Manufacturing, and Packaging. In a recent month, the four departments incurred three shared indirect expenses. The amounts of these indirect expenses and the bases used to allocate them follow. Indirect Expense CostAllocation BaseSupervision$82,500Number of employeesUtilities 50,000Square feet occupiedInsurance 22,500Value of assets in useTotal$155,000 Departmental data for the company’s recent reporting period follow. DepartmentEmployees Square Feet Asset ValuesMaterials 27 25,000 $6,000 Personnel 9 5,000 1,200 Manufacturing 63 55,000 37,800 Packaging 51 15,000 15,000 Total 150 100,000 $60,000 1. Use this information to allocate each of the three indirect expenses across the four departments.2. Prepare a summary table that reports the indirect expenses assigned to each of the four departments. **Task Description***Complete this question by entering your answers in the tabs below.*Tabs:- **Required 1**- **Required 2**---**Instruction**Prepare a summary table that reports the indirect expenses assigned to each of the four departments.---**Table Structure**| | Supervision | Utilities | Insurance | Total ||------------------------|-------------|-----------|-----------|-------|| **Materials** | | | | $0 || **Personnel** | | | | $0 || **Manufacturing** | | | | $0 || **Packaging** | | | | $0 || **Totals** | $0 | $0 | $0 | $0 |---**Navigation**- **Required 1** (selected)- **Required 2**Use the navigation buttons at the bottom to switch between the required tasks. The displayed image is a tabular form designed for the allocation of three indirect expenses (Supervision expenses, Utilities, and Insurance) across four departments (Materials, Personnel, Manufacturing, Packaging).### Structure of the Table:#### Sections:1. **Supervision Expenses**2. **Utilities**3. **Insurance**Each section consists of several columns:- **Department**: Lists the names of the departments.- **Allocation Base**: Contains a blank space for the appropriate base to be filled in for allocation.- **Percent of Allocation Base**: Comprises two columns: - **Numerator** and **Denominator**: Spaces to fill in numbers for calculating the percentage. - **% of Total**: Column to compute the percentage of each department from the total.- **Cost to be Allocated**: Blank space for indicating the total expense amount to be distributed.- **Allocated Cost**: Target column where the computed allocated expenses for each department will be recorded.Each expense category (Supervision, Utilities, Insurance) repeats the same columns and layout for clarity and uniformity.### Additional Features:- **Totals Row**: At the bottom of each section, meant for calculating the total values to ensure the sum of percentages equals 100%, along with the total costs allocated.### Navigation:- **Tabs at the Top**: - "Required 1" and "Required 2" suggest a multi-step process or separate pages to input or check data.The table in the image is designed to allow input of values and formulas to automatically distribute the indirect expenses proportionately across departments based on selected allocation bases. This would assist educational purposes by training students on cost allocation practices within a typical business scenario.

Cost Allocation: The distribution of a single cost among several companies, business units, or cost…

Answered: Woh Che Co. has four departments:…

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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Exercise 22-5 Departmental expense allocations LO P2

Woh Che Co. has four departments: Materials, Personnel, Manufacturing, and Packaging. In a recent month, the four departments incurred three shared indirect expenses. The amounts of these indirect expenses and the bases used to allocate them follow.

Indirect Expense		Cost	Allocation Base
Supervision	$	82,500	Number of employees
Utilities		50,000	Square feet occupied
Insurance		22,500	Value of assets in use
Total	$	155,000

Departmental data for the company’s recent reporting period follow.

Department	Employees		Square Feet	Asset Values
Materials		27			25,000	$	6,000
Personnel		9			5,000		1,200
Manufacturing		63			55,000		37,800
Packaging		51			15,000		15,000
Total		150			100,000	$	60,000

1. Use this information to allocate each of the three indirect expenses across the four departments.
2. Prepare a summary table that reports the indirect expenses assigned to each of the four departments.

**Task Description**

*Complete this question by entering your answers in the tabs below.*

Tabs:
- **Required 1**
- **Required 2**

---

**Instruction**

Prepare a summary table that reports the indirect expenses assigned to each of the four departments.

---

**Table Structure**

| | Supervision | Utilities | Insurance | Total |
|------------------------|-------------|-----------|-----------|-------|
| **Materials** | | | | $0 |
| **Personnel** | | | | $0 |
| **Manufacturing** | | | | $0 |
| **Packaging** | | | | $0 |
| **Totals** | $0 | $0 | $0 | $0 |

---

**Navigation**

- **Required 1** (selected)
- **Required 2**

Use the navigation buttons at the bottom to switch between the required tasks.

The displayed image is a tabular form designed for the allocation of three indirect expenses (Supervision expenses, Utilities, and Insurance) across four departments (Materials, Personnel, Manufacturing, Packaging).

### Structure of the Table:

#### Sections:

1. **Supervision Expenses**
2. **Utilities**
3. **Insurance**

Each section consists of several columns:
- **Department**: Lists the names of the departments.
- **Allocation Base**: Contains a blank space for the appropriate base to be filled in for allocation.
- **Percent of Allocation Base**: Comprises two columns:
- **Numerator** and **Denominator**: Spaces to fill in numbers for calculating the percentage.
- **% of Total**: Column to compute the percentage of each department from the total.
- **Cost to be Allocated**: Blank space for indicating the total expense amount to be distributed.
- **Allocated Cost**: Target column where the computed allocated expenses for each department will be recorded.

Each expense category (Supervision, Utilities, Insurance) repeats the same columns and layout for clarity and uniformity.

### Additional Features:

- **Totals Row**: At the bottom of each section, meant for calculating the total values to ensure the sum of percentages equals 100%, along with the total costs allocated.

### Navigation:

- **Tabs at the Top**:
- "Required 1" and "Required 2" suggest a multi-step process or separate pages to input or check data.

The table in the image is designed to allow input of values and formulas to automatically distribute the indirect expenses proportionately across departments based on selected allocation bases. This would assist educational purposes by training students on cost allocation practices within a typical business scenario.

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