Question

Clybourne Cycle Shop has two retail departments referred to as Cycles and Clothing. Utility expense for a recent month totaled $2,000. Management allocates the cost of utilities to the company's two departments according to the floor space each occupies. The Cycles Department occupies 600 square feet while the Clothing Department occupies 900 of the total square footage. How much of the utilities should be allocated to the Clothing Department? A) $1,200 B) $1,000 C) $900 D) $600 E) $800

Answer 1

Answer:

A) $1,200

Explanation:

The computation of the allocated amount to the clothing department is shown below:

= Total utility expense × Clothing Department square feet ÷ Total square feet

where,

Total square feet would be

= Clothing Department square feet + Cycles department square feet

= 600 + 900

= 1,500

And, the other items values would remain the same

Now put these values to the above formula  

So, the value would equal to

= $2,000 × 900 ÷ 1,500

= $1,200