However, as the administrative expenses are quite high, $350,000, the company’s accountant wants to allocate this amount between sales and human resources departments.First, he collects information regarding the hours worked from both departments. The company sells sports equipment and outfit and realizes a profit of $500,000 annually. Prorating is also applied to bonds, dividend payments, and annual insurance premiums.Company XYZ is a leading retailer with stores all over the nation. So, banks prorate the interest payments into equal fractional proportions of the entire amount. To partake is to take for one's own personal use a portion of something: to partake of food.Another common example is the annual interest rate that can be broken into monthly or bi-monthly interest rate over the term of a loan.
Summary DefinitionDefine Pro Rata Per Share: Pro rate share means a earnings and losses are split amongst shareholders based on their ownership percentages. Hence, both departments worked for 3,300 hours.Then, he calculates the pro rata percentages as follows:Then, he allocates the administrative expenses of $350,000 between human resources and sales as follows:Human Resources: $350,000 x 0.45 = $159,091So, $159,091 of the total administrative expenses go towards human resources and $190,909 go towards sales.
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