Problem 22-2B Allocation of indirect expenses to departments P2Harmon's has two operating departments, Clothing and Shoes. Indirect expenses for the period follow.DepartmentClothingShoesTotalRentThe company occupies 4,000 square feet of a rented building. In prior periods, the company divided the $92,000 of indirect expenses by4,000 square feet to find an average cost of $23 per square foot, and then allocated indirect expenses to each department based on thesquare feet it occupied.The company now wants to allocate indirect expenses using the allocation bases shown below.Check (1) Total allocated to Shoes, $36,800AdvertisingInsuranceTotal(2) Insurance allocated to Clothing, $3,600Square Feet2,4001,6004,000$50,00030,00012,000$92,000Sales$ 240,000360,000$600,000Required1. Allocate indirect expenses to the two departments using the allocation method used in prior periods.Value of Insured Assets$ 36,00084,000$120,000Page 8972. Allocate indirect expenses to the two departments. Rent expense is allocated based on square feet occupied. Advertising expense isallocated based on total sales. Insurance expense is allocated based on the value of insured assets.

Answer:- Allocation of expenses is the allocation of expenses to each department and the allocation…

Problem 22-2B Allocation of indirect expenses to departments P2 Harmon's has two operating departments, Clothing and Shoes. Indirect expenses for the period follow. Department Clothing Shoes Total Rent Check (1) Total allocated to Shoes, $36,800 Advertising Insurance The company occupies 4,000 square feet of a rented building. In prior periods, the company divided the $92,000 of indirect expenses by 4,000 square feet to find an average cost of $23 per square foot, and then allocated indirect expenses to each department based on the square feet it occupied. The company now wants to allocate indirect expenses using the allocation bases shown below. Total (2) Insurance allocated to Clothing, $3,600 Square Feet 2,400 1,600 4,000 $50,000 30,000 12,000 $92,000 Sales $ 240,000 360,000 $600,000 Required 1. Allocate indirect expenses to the two departments using the allocation method used in prior periods. Value of Insured Assets $ 36,000 84,000 $120,000 Page 897 2. Allocate indirect expenses to the two departments. Rent expense is allocated based on square feet occupied. Advertising expense is allocated based on total sales. Insurance expense is allocated based on the value of insured assets.

Problem 22-2B Allocation of indirect expenses to departments P2 Harmon's has two operating departments, Clothing and Shoes. Indirect expenses for the period follow. Department Clothing Shoes Total Rent Check (1) Total allocated to Shoes, $36,800 Advertising Insurance The company occupies 4,000 square feet of a rented building. In prior periods, the company divided the $92,000 of indirect expenses by 4,000 square feet to find an average cost of $23 per square foot, and then allocated indirect expenses to each department based on the square feet it occupied. The company now wants to allocate indirect expenses using the allocation bases shown below. Total (2) Insurance allocated to Clothing, $3,600 Square Feet 2,400 1,600 4,000 $50,000 30,000 12,000 $92,000 Sales $ 240,000 360,000 $600,000 Required 1. Allocate indirect expenses to the two departments using the allocation method used in prior periods. Value of Insured Assets $ 36,000 84,000 $120,000 Page 897 2. Allocate indirect expenses to the two departments. Rent expense is allocated based on square feet occupied. Advertising expense is allocated based on total sales. Insurance expense is allocated based on the value of insured assets.

Financial & Managerial Accounting

14th Edition

ISBN:9781337119207

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter18: Activity-Based Costing

Section: Chapter Questions

Problem 18.3APR: Activity-based and department rate product costing and product cost distortions Black and Blue...

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