Question

Super Grocery store allocates its service department expenses to its various operating (sales) departments. The following data is available for its service departments: ExpenseBasis for allocation Amount AdministrativeSquare feet of floor space $17,000 AdvertisingAmount of dollar sales $10,000 The following information is available for its three operating (sales) departments: Department Square Feet Dollar Sales Produce 960 $82,000 Bakery 640 $32,000 Meats 1,600 $44,000 Totals 3,200 $158,000 What is the total administrative expense allocated to the Meats department

Answer 1

Answer: $8500

Explanation:

The total administrative expense allocated to the Meats department will be calculated thus:

= (Total administrative expense/Total Sales in square Feet) × Meat Department sales in Square Feet

= (17000/3200) × 1600

= $8500

The total administrative expense allocated to the Meats department is $8500.