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A retailer pays $190,000 rent each year for its two-story building. The space in this building is occupied by five departments as specified here Department
A retailer pays $190,000 rent each year for its two-story building. The space in this building is occupied by five departments as specified here Department Jewelry Cosmetics Housewares Tools Shoes Square feet occupied 1,548 (first-floor) 2,860 (first-floor 1,760 (second-floor) 880 (second-floor) 1,760 (second floor) The company allocates 60% of total rent expense to the first floor and 40% 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 The company allocates 60% of total rent expense to the first floor and 40% 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 Stop 1: Allocate totalrent expense between the two floors, Amount Allocated of Total Cost First floor $190.000 60% $ 114.000 Second floor 190.000 60% 114 000 Totals 120 % $ 228.000 Step 2: Allocate these portion of totalment expense across the departments occupying each floor First Floor Sq. Feet % of Total Cost Jewelry Dept 1.540 Cosmetics Dept 2 860 % Totals 4.400 % Second Floor Sq. Foot % of Total Cost Housewares Dept Tools Dept % Shoes Dept Totals
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