Problem 24-1A Allocation of building occupancy costs to departments LOP2 [The following information applies to the questions displayed belowl National Bank has several departments that occupy both floors of a two-story building. The departmental accounting system has a single account, Bullding occupancy Cost. In its ledger. The types and amounts of occupancy costs recorded in this account for the current period follow. Depreciation-Bullding 18,000 Interest-Building mortgage 27,000 Taxes-Bullding and land 8.000 Gas (heating) expense 2.500 Lighting expense 3,000 Maintenance expense 5.500 Total occupancy cost 64,000 The building has 4,000 square feet on each foor In prior perlods. the accounting manager merely divided the $64,000 occupancy cost by 8,000 square feet to find an average cost of $8 per square foot and then charged each department a bullding occupancy cost equal to this rate times the number of square feet that it occupied Diane Under manages a first-floor department that occuples 1100 square feet, and Juan Chiro manages a second-floor department that occuples 1,700 square feet of fioor space. In discusslng 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 ls 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. Ilghting. and maintenance)