A retailer pays $130,000 rent each year for its two-story building. The space in this building is occupied by five departments as specified here. Department Square feet occupied Jewelry . 1,440 (first-floor) Cosmetics . 3,360 (first-floor) Housewares . 2,016 (second-floor) Tools . 960 (second-floor) Shoes . 1,824 (second-floor) The company allocates 65% of total rent expense to the first floor and 35% to the second floor, and then allocates rent expense for each floor to the departments occupying that floor on the basis of space occupied. Determine the rent expense to be allocated to each department.

A retailer pays $130,000 rent each year for its two-story building. The space in this building is occupied by five departments as specified here. Department Square feet occupied Jewelry . 1,440 (first-floor) Cosmetics . 3,360 (first-floor) Housewares . 2,016 (second-floor) Tools . 960 (second-floor) Shoes . 1,824 (second-floor) The company allocates 65% of total rent expense to the first floor and 35% to the second floor, and then allocates rent expense for each floor to the departments occupying that floor on the basis of space occupied. Determine the rent expense to be allocated to each department.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter17: Activity Resource Usage Model And Tactical Decision Making

Section: Chapter Questions

Problem 6E: Elliott, Inc., has four salaried clerks to process purchase orders. Each clerk is paid a salary of...

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