Question: Won Han 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 . . . . . . . . . . . . . . $ 75,000 Number of employees
\Utilities . . . . . . . . . . . . . . . . . 60,000 Square feet occupied
Insurance . . . . . . . . . . . . . . . . 16,500 Value of assets in use
Total . . . . . . . . . . . . . . . . . . . . $151,500
Departmental data for the company's recent reporting period follow.
Department Employees Square Feet Asset Values
Materials . . . . . . . . . . . . 18 27,000 $ 6,000
Personnel . . . . . . . . . . . . 6 4,500 1,200
Manufacturing . . . . . . . . 66 45,000 37,800
Packaging . . . . . . . . . . . . 30 13,500 15,000
Total . . . . . . . . . . . . . . . 120 90,000 $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.