Question

A company has two departments, Y and Z that incur delivery expenses. An analysis of the total delivery expense of $15,000 indicates that Dept. Y had a direct expense of $1,600 for deliveries and Dept. Z had no direct expense. The indirect expenses are $13,400. The analysis also indicates that 55% of regular delivery requests originate in Dept. Y and 45% originate in Dept. Z. Departmental delivery expenses for Dept. Y and Dept. Z, respectively, are:

Answer 1

Answer:

department y = $8,970

department z = $6,030

Explanation:

departments       direct expenses       indirect expenses

y                              $1,600                   $13,400 x 55% = $7,370

z                                     $0                   $13,400 x 45% = $6,030

total delivery expenses:

department y = $1,600 + $7,370 = $8,970

department z = $0 + $6,030 = $6,030

indirect delivery expenses are allocated based on the percentage of use by each department.