Woh Che Co. has four departments: materials, personnel, manufacturing, and packaging. In a recent month, the four departments incurred three shared indirect expenses. The amounts of these indirect expenses and the bases used to allocate them follow. Indirect Expense CostAllocation BaseSupervision$82,500Number of employeesUtilities 50,000Square feet occupiedInsurance 22,500Value of assets in useTotal$155,000 Departmental data for the company’s recent reporting period follow. DepartmentEmployees Square Feet Asset ValuesMaterials 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 1. Use this information to allocate each of the three indirect expenses across the four departments.2. Prepare a summary table that reports the indirect expenses assigned to each of the four departments.

Based on the given information allocate the indirect expenses to each of the department.Allocation…

Answered: Woh Che Co. has four departments:…

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Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter10: Evaluating Decentralized Operations

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Woh Che Co. has four departments: materials, personnel, manufacturing, and packaging. In a recent month, the four departments incurred three shared indirect expenses. The amounts of these indirect expenses and the bases used to allocate them follow.

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

Departmental data for the company’s recent reporting period follow.

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

1. Use this information to allocate each of the three indirect expenses across the four departments.
2. Prepare a summary table that reports the indirect expenses assigned to each of the four departments.

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