Question

The Evendale Store is just one of many stores owned and operated by the company. The Apparel Department is one of many departments at the Evendale Store. The central warehouse serves all of the company’s stores. Corporate legal office salaries $60,600Apparel Department cost of sales—Evendale Store $116,100Corporate headquarters building lease $56,400Store manager’s salary—Evendale Store $18,300Apparel Department sales commission—Evendale Store $7,950Store utilities—Evendale Store $17,800Apparel Department manager’s salary—Evendale Store $9,950Central warehouse lease cost $24,000Janitorial costs—Evendale Store $13,700Required: 1. What is the total amount of the costs listed above that are direct costs of the Apparel Department? 2. What is the total amount of the costs listed above that are direct costs of the Evendale Store? 3. What is the total amount of the Apparel Department’s direct costs that are also variable costs with respect to total departmental sales?

Answer 1

Answer:

Direct cost for Apparel Department

Apparel Department cost of sales—Evendale Store $116,100

Apparel Department sales commission—Evendale Store $7,950

Apparel Department manager’s salary—Evendale Store $9,950

Total            134,000

Direct cost for Evendale Store

Apparel Department cost of sales—Evendale Store $116,100

Store manager’s salary—Evendale Store $18,300

Apparel Department sales commission—Evendale Store $7,950

Apparel Department manager’s salary—Evendale Store $9,950

Janitorial costs—Evendale Store $13,700

Total                 166,000

Apparel Direct cost which are also variable

(change as object cost increase)

Apparel Department cost of sales—Evendale Store $116,100

Apparel Department sales commission—Evendale Store $7,950

Total                 124,050

Explanation:

a) we should consider which cost are directly linked into Apparel department only.

b) here we have to determinate cost directly linked into Evendale Store

c) While in this case, besides looking for cost linked to Apparel department, they also need to be variable thus, changing with the object cost.