A company has two departments, A and B that incur delivery expenses. An analysis of the total delivery expense of $9,000 indicates that Dept. A had a direct expense of $1,000 for deliveries and Dept. B had no direct expense. The indirect expenses are $8,000. The analysis also indicates that 60% of regular delivery requests originate in Dept. A and 40% originate in Dept. B. Departmental delivery expenses for Dept. A and Dept. B,
A) $4,500; $4,500.
B) $5,800; $3,200.
C) $5,500; $3,500.
D) $5,500; $4,500.
E) $5,400; $3,600.

Question

Quizplus · Accepted Answer

The total indirect expenses of $8,000 should be allocated based on the percentage of delivery requests originating from each department. Dept. A is responsible for 60% of the requests, so it should bear 60% of the $8,000 indirect expenses, which is $4,800. Adding Dept. A's direct expense of $1,000 gives a total of $5,800 for Dept. A. Dept. B, responsible for 40% of the requests, should bear 40% of the $8,000 indirect expenses, which is $3,200.

A Company Has Two Departments, a and B That Incur