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A company has two departments, Y and Z that incur wage expenses. An analysis of the total wage expense of $37,000 indicates that Dept. Y had a direct wage expense of $5,600 and Dept. Z had a direct wage expense of $8,900. The remaining expenses are indirect and analysis indicates they should be allocated evenly between the two departments. Departmental wage expenses for Dept. Y and Dept. Z, respectively, are

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Answer:

$16,850 Department Y wage expense

$20,150 is Department Z wage expense

Explanation:

Departmental Wage Expense for Dept. Y and Dept Z respectively are:

Indirect Wages = 37,000 – 5,600 – 8,900 = 22,500

Therefore 22,500 is to be allocated between departments in ratio of 1:1

Department Y wage expense

= 5,600 + (22,500 * ½)

= 5,600 + 11,250 = $16,850

Therefore $16,850 Department Y wage expense

Department Z wage expense

= 8,900 + (22,500 * ½) = 8,900

8,900 + 11,250 = $20,150

Therefore $20,150 is Department Z wage expense

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