American Retail has two departments, Housewares and Sporting. Indirect expenses for the period follow. $ 90,000 50,000 20,000 $ 160,000 Rent Advertising Insurance Total The company occupies 8,000 square feet of a rented building. In prior periods, the company divided the $160,000 of indirect expenses by 8,000 square feet to find an average cost of $20 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 below. Department Housewares Sporting Total Square Feet 4,400 3,600 8,000 Sales $360,000 640,000 $ 1,000,000 Value of Insured Assets $ 80,000 120,000 $ 200,000

American Retail has two departments, Housewares and Sporting. Indirect expenses for the period follow. $ 90,000 50,000 20,000 $ 160,000 Rent Advertising Insurance Total The company occupies 8,000 square feet of a rented building. In prior periods, the company divided the $160,000 of indirect expenses by 8,000 square feet to find an average cost of $20 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 below. Department Housewares Sporting Total Square Feet 4,400 3,600 8,000 Sales $360,000 640,000 $ 1,000,000 Value of Insured Assets $ 80,000 120,000 $ 200,000

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter2: Basic Cost Management Concepts

Section: Chapter Questions

Problem 22E: Ellerson Company provided the following information for the last calendar year: During the year,...

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