City Bank has several departments that occupy both floors of a two-story building. The departmental accounting system has a single account, Building Occupancy Cost, in its ledger. The types and amounts of occupancy costs recorded in this account for the current period follow.

DepreciationBuilding	$	27,000
InterestBuilding mortgage		40,500
TaxesBuilding and land		12,000
Gas (heating) expense		3,750
Lighting expense		4,500
Maintenance expense		8,250
Total occupancy cost	$	96,000

The building has 6,000 square feet on each floor. In prior periods, the accounting manager merely divided the $96,000 occupancy cost by 12,000 square feet to find an average cost of $8 per square foot and then charged each department a building occupancy cost equal to this rate times the number of square feet that it occupied.

Laura Diaz manages a first-floor department that occupies 900 square feet, and Lauren Wright manages a second-floor department that occupies 1,800 square feet of floor space. In discussing the departmental reports, the second-floor manager questions whether using the same rate per square foot for all departments makes sense because the first-floor space is more valuable. This manager also references a recent real estate study of average local rental costs for similar space that shows first-floor space worth $40 per square foot and second-floor space worth $10 per square foot (excluding costs for heating, lighting, and maintenance).

References

Section BreakDifficulty: 3 HardLearning Objective: 21-P1 Assign overhead costs using twostage cost allocation.

1.

value: 10.00 points

Required information

Required:

1.	Allocate occupancy costs to the Diaz and Wright departments using the current allocation method. (Omit the "$" sign in your response.)

Department	Total
Diazs Dept.	$
Wright's Dept.	$