Exercise 24-5 Service department expenses allocated to operating departments LO P2 Advertising and purchasing department expenses of Cozy Bookstore are allocated to operating departments on the basis of dollar sales and purchase orders, respectively. Information about the allocation bases for the three operating departments follows. Department Sales Purchase Orders Books $ 495,000 516 Magazines 198,000 360 Newspapers 207,000 324 Total $ 900,000 1,200 Complete the following table by allocating the expenses of the two service departments (advertising and purchasing) to the three operating departments.

Exercise 24-5 Service department expenses allocated to operating departments LO P2

Advertising and purchasing department expenses of Cozy Bookstore are allocated to operating departments on the basis of dollar sales and purchase orders, respectively. Information about the allocation bases for the three operating departments follows.

Department	Sales		Purchase Orders
Books	$	495,000		516
Magazines		198,000		360
Newspapers		207,000		324
Total	$	900,000		1,200

Complete the following table by allocating the expenses of the two service departments (advertising and purchasing) to the three operating departments. Explanation: Computations for allocations of service dept. costs to operating departments Advertising: $24,000   Sales % of Total Cost   Books Dept. $ 495,000     55   %   $ 13,200       Magazines Dept.   198,000     22         5,280       Newspapers Dept.   207,000     23         5,520               Totals $ 900,000     100   %   $ 24,000             Purchasing: $34,000   Purchase Orders % of Total Cost   Books Dept.   516     43   %   $ 14,620       Magazines Dept.   360     30         10,200       Newspapers Dept.   324     27         9,180                 Totals   1,200     100   %   $ 34,000