Super Grocery store allocates its service department expenses to its various operating (sales) departments. The following data is available for its service departments: Expense Basis for allocation Amount Administrative Square feet of floor space $ 34,000 Advertising Amount of dollar sales $ 27,000 The following information is available for its three operating (sales) departments: Department Square Feet Dollar Sales Produce 1,470 $ 99,000 Bakery 980 $ 49,000 Meats 2,450 $ 61,000 Totals 4,900 $ 209,000 What is the total administrative expense allocated to the Meats department?

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Business

Thunder Thighs

2 July, 07:01

Super Grocery store allocates its service department expenses to its various operating (sales) departments. The following data is available for its service departments: Expense Basis for allocation Amount Administrative Square feet of floor space $ 34,000 Advertising Amount of dollar sales $ 27,000 The following information is available for its three operating (sales) departments: Department Square Feet Dollar Sales Produce 1,470 $ 99,000 Bakery 980 $ 49,000 Meats 2,450 $ 61,000 Totals 4,900 $ 209,000 What is the total administrative expense allocated to the Meats department?

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Elijah Garcia · Answer 1

Allocated administrative expense to Meat department = $17,000

Explanation:

The basis of allocating the administrative expense is the floor space occupied by the the department.

Administrative expense

= Floor space occupied/Total floor area * Administrative expense

Total floor area = (1,470+980+2,450) = 4,900 square feet

Floor area occupied by meat department = 2,450

Administrative expense = $34,000

Allocated administrative expense to Meat department:

= (2,450/4,900) * $34,000 = $17,000

= $17,000