1. The allocation of the three indirect expenses across the four departments of Woh Checo is as follows:
<u>Supervision Expense:</u>
Basis = Number of Employees
Materials = $14,850 ($82,500 x 27/150)
Personnel = $4,950 ($82,500 x 9/150)
Manufacturing = $34,650 ($82,500 x 63/150)
Packaging = $28,050 ($82,500 x 51/150)
<u>Utilities Expense: </u>
Basis = Square Feet
Materials = $12,500 ($50,000 x 25,000/100,000)
Personnel = $2,500 ($50,000 x 5,000/100,000)
Manufacturing = $27,500 ($50,000 x 55,000/100,000)
Packaging = $7,500 ($50,000 x 15,000/100,000)
<u>Insurance Expense:</u>
Basis = Assets Value
Materials = $2,250 ($22,500 x 6,000/$60,000)
Personnel = $450 ($22,500 x 1,200/$60,000)
Manufacturing = $14,175 ($22,500 x 37,800/$60,000)
Packaging = $5,625 ($22,500 x 15,000/$60,000)
2. The summary table to report the assignment of the indirect expenses to the four departments is as follows:
<u>Allocation of Indirect Expenses to the Departments:</u>
Total Materials Personnel Manufacturing
Packaging
Supervision $82,500 $14,850 $4,950 $34,650 $28,050
Utilities 50,000 12,500 2,500 27,500 7,500
Insurance 22,500 2,250 450 14,175 5,625
Total $ 155,000 $29,600 $7,900 $76,325 $41,175
Data and Calculations:
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
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
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