The 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. $\begin{array}{lcccc}
&\text { Purchasing }& \text { Maintenance }&\text { Fabrication }& \text { Assembly }\
\text { Operating costs } & \$ 32,000 & \$ 18,000 & \$ 96,000 & \$ 62,000 \
\text { No. of purchase orders } && & 16 & 4 \
\text { Sq. ft. of space } & & &3,300 & 2,700
\end{array}$
Required:
Compute the amount of Purchasing department expense to be allocated to Assembly.
A) $8,100.
B) $6,400.
C) $25,600.
D) $9,900.
E) $14,400.

Question

The 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. $\begin{array}{lcccc}
&\text { Purchasing }& \text { Maintenance }&\text { Fabrication }& \text { Assembly }\ 
\text { Operating costs } & \$ 32,000 & \$ 18,000 & \$ 96,000 & \$ 62,000 \
\text { No. of purchase orders } && & 16 & 4 \
\text { Sq. ft. of space } & & &3,300 & 2,700
\end{array}$ 
 Required:
Compute the amount of Purchasing department expense to be allocated to Assembly.
A) $8,100.
B) $6,400.
C) $25,600.
D) $9,900.
E) $14,400.

Quizplus · Accepted Answer

To allocate Purchasing department expense to Assembly, we need to consider the total purchase orders placed by Assembly and the total purchase orders placed by all departments.

Total purchase orders for all departments = $51,200
Purchase orders placed by Assembly = $16,000

Therefore, the proportion of purchase orders placed by Assembly is: 
$16,000 / $51,200 = 0.3125

Now, we can allocate the Purchasing department expenses to Assembly by multiplying the total Purchasing department expenses ($20,480) by the proportion of purchase orders placed by Assembly:

$20,480 x 0.3125 = $6,400

Hence, the amount of Purchasing department expense to be allocated to Assembly is $6,400. The correct answer is B.

The Following Is a Partially Completed Lower Section of a Departmental