Lucia Company has two service departments: Office and Purchasing. Total expenses for the Office is $75,000 and for Purchasing is $58,300. Expenses for the Office are allocated to operating departments based on sales. Expenses for Purchasing are allocated to operating departments based on purchase orders. Department Books Magazines Newspapers Total Sales $ 150,000 84,000 66,000 $ 300,000 Purchase Orders 1,680 945 875 3,500 Allocate the expenses from (a) the Office and (b) Purchasing to each of the company's three operating departments using the given information.

Lucia Company has two service departments: Office and Purchasing. Total expenses for the Office is $75,000 and for Purchasing is $58,300. Expenses for the Office are allocated to operating departments based on sales. Expenses for Purchasing are allocated to operating departments based on purchase orders. Department Books Magazines Newspapers Total Sales $ 150,000 84,000 66,000 $ 300,000 Purchase Orders 1,680 945 875 3,500 Allocate the expenses from (a) the Office and (b) Purchasing to each of the company's three operating departments using the given information.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 30E: A company uses charging rates to allocate service department costs to the using departments. The...

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Lucia Company has two service departments: Office and Purchasing. Total expenses for the Office is $60,100 and for Purchasing is $43,000. Expenses for the Office are allocated to operating departments based on sales. Expenses for Purchasing are allocated to operating departments based on purchase orders. Purchase Orders 984 648 768 Department Вooks Sales $ 163,800 97,500 128,700 $ 390,000 Magazines Newspapers Total 2,400 Allocate the expenses from (a) the Office and (b) Purchasing to each of the company's three operating departments using the given information. Cost to be Allocated Office Allocation Base Percent of Allocation Base Allocated Cost Department Numerator Denominator % of Total Вooks Magazines Newspapers Totals Purchasing Cost to be Allocated Allocation Base Percent of Allocation Base Allocated Cost Department Numerator Denominator % of Total Вooks Magazines Newspapers Totals
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