Question

Jessica Porter works in both the jewelry department and the cosmetics department of a retail store. She assists customers in both departments and arranges and stocks merchandise in both departments. The store allocates her $30,000 annual wages between the two departments based on the time worked in the two departments. Jessica reported the following hours and activities spent in the two departments. Allocate Jessica’s annual wages between the two departments.

Activities	Hours
Selling in jewelry department	51
Arranging and stocking merchandise in jewelry department	6
Selling in cosmetic department	12
Arranging and stocking merchandise in cosmetic department	7
Idle time spent waiting for a customer to enter one of the department	4

Short answer

Jewelry department:$22,500.

Cosmetic department:$7,500.

Step-by-step solution

Step-By-Step SolutionStep 1: Definition of Wages Expenses

The expenses concerned with the payment of money to the employees against their services are known as wages expenses. Such expenses generally depend upon the hours worked by the labor.

Allocating annual wages

Activities	Hours	/	Total hours	X	Annual wages	=	Allocated Cost
Selling in the jewelry department	51	/	76	X	$30,000	=	$20,132
Arranging and stocking merchandise in the jewelry department	6	/	76	X	$30,000	=	$2,368
							$22,500
Selling in the cosmetic department	12	/	76	X	$30,000	=	$4,737
Arranging and stocking merchandise in the cosmetic department	7	/	76	X	$30,000	=	$2,763
	76						$7,500