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E21-1 Won Han Co

Price: $2.50


E21-1 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 
Tota  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.

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