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21 September, 19:51

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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  1. 21 September, 23:25
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    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
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