Question

A company pays $19,000 per period to rent a small building that has 10,400 square feet of space. This cost is allocated to the company's three departments on the basis of the amount of the space occupied by each. Department One occupies 2,080 square feet of floor space, Department Two occupies 3,120 square feet of floor space, and Department Three occupies 5,200 square feet of floor space. If the rent is allocated based on the total square footage of the space, Department One should be charged rent expense for the period of:

Answer 1

Answer:

Rent charged on department one = $3,800

Explanation:

As per the data given in the question,

Department        Square Feet

     1                        2,080

     2                       3,120

     3                       5,200

Total space           10,400

If rent is allocated on the basis of total square footage of space then

Rent of small building = $19,000 per period

Rent charged on Department one = (2,080 feet ÷ 10,400 feet) × $19,000

= $3,800