Question

A company has two departments, Y and Z that incur delivery expenses. An analysis of the total delivery expense of $14,000 indicates that Dept. Y had a direct expense of $1,500 for deliveries and Dept. Z had no direct expense. The indirect expenses are $12,500. The analysis also indicates that 50% of regular delivery requests originate in Dept. Y and 50% originate in Dept. Z. Departmental delivery expenses for Dept. Y and Dept. Z, respectively, are:

Answer 1

Answer:

Dept Y = $7750

Dept Z = $6250

Explanation:

To allocate the cost the cost , the first step is to deduct the indirect expenses related to Y

The allocate the balance in the ratio of 50:50 to Y and Z

Total delivery expenses - $14,000

Dept Y = 1500 +( 12500*50%)

1500+6250 =7750

Dept Z = 6250