The following is a partially completed lower section of a departmental expense allocation spreadsheet for Stoneham. It reports the total amounts of direct and indirect expenses for the four departments. Purchasing department expenses are allocated to the operating departments on the basis of purchase orders. Maintenance department expenses are allocated based on square footage. Compute the amount of Purchasing department expense to be allocated to Assembly.
A) $6,400.
B) $9,900.
C) $8,100.
D) $14,400.
E) $25,600.

Question

Quizplus · Accepted Answer

Purchasing department expenses are allocated to the operating departments on the basis of purchase orders. Assembly has 1,600 purchase orders, which is 40% of the total purchase orders (1,600 / 4,000 = 40%). Therefore, Assembly should be allocated 40% of the Purchasing department expenses ($25,600 * 40% = $10,240). However, the spreadsheet shows that Assembly has already been allocated $2,140 of Purchasing department expenses. Therefore, the amount of Purchasing department expense to be allocated to Assembly is $10,240 - $2,140 = $8,100.

The Following Is a Partially Completed Lower Section of a Departmental