Woh Che Co has four departments materials personnel manufact

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.

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

Indirect Expense		Cost	Allocation Base
Supervision	$	84,000	Number of employees
Utilities		65,000	Square feet occupied
Insurance		30,000	Value of assets in use
Total	$	179,000

Solution

Supervision expenses Allocation base Percent of allocation base X Indirect cost Allocated Cost Department Numerator Denominator % of total Material 27 27 150 18% 84,000 15120 Personnel 9 9 150 6% 84,000 5040 Manufacturing 60 60 150 40% 84,000 33600 Packing 54 54 150 36% 84,000 30240 Totals 150 100% 84000 Utilities Department Allocation base Percent of allocation base X Indirect cost Allocated Cost Value of assets in use Numerator Denominator % of total Material 58000 58000 145000 40% 65000 26000 Personnel 7250 7250 145000 5% 65000 3250 Manufacturing 65250 65250 145000 45% 65000 29250 Packing 14500 14500 145000 10% 65000 6500 Totals 145000 65000 Insurance Value of assets in use Numerator Denominator % of total Material 7500 7500 75000 10% 30000 3000 Personnel 1500 1500 75000 2% 30000 600 Manufacturing 48750 48750 75000 65% 30000 19500 Packing 17250 17250 75000 23% 30000 6900 Totals 75000 30000 2 Supervision expenses Utilities Insurance Totals Material 15120 26000 3000 44120 Personnel 5040 3250 600 8890 Manufacturing 33600 29250 19500 82350 Packing 30240 6500 6900 43640 Totals 84000 65000 30000 179000