Question

he following is a partially completed lower section of a departmental expense allocation spreadsheet for Brickland. 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. Purchasing Maintenance Fabrication Assembly Operating costs $ 35,000 $ 19,800 $ 99,000 $ 65,000 No. of purchase orders 16 4 Sq. ft. of space 3,450 2,550 Required: Compute the amount of Purchasing department expense to be allocated to Assembly

Answer 1

$7,000

Step-by-step explanation:

The computation of the amount of purchasing department allocated to assembly department is shown below:

= Total purchasing department cost × number of purchase order ÷Total numbers of purchase orders in overall operating departments

= $35,000 × 4 ÷ 20

= $7,000

The 20 number of purchase orders is come from

= 16 + 4

= 20

We simply applied the above formula