Question

Selected data for Miller Company, which operates three departments, follow:

Answer 1

Answer:

From the attached excel file, total cost allocated are as follows:

Deparment A = $99,600

Department B = $73,600

Department C = $51,600

Common cost = $57,600

Explanation:

Note: See the attached excel for the schedule assigning the fixed expenses to the three departments.

In the attached excel file, the following formulae are used to allocate costs to each department:

Depreciation on equipment (based on average cost of equipment) = Depreciation on equipment * (Average cost of equipment of a department / Total average cost of equipment of the three departments)

Real estate taxes (based on Square feet of floor space) = Real estate taxes * (Square feet of floor space of a department / Total square feet of floor space of the three departments)

Personal property taxes: This is a common cost. It cannot therefore be allocated.

Personnel department expenses (based on payroll) = Personnel department expenses * (Payroll of a department / Payroll of the three departments)

Download xlsx