S 22-7 Rent expense allocated to departments LO P2 A retailer pays $140,000 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 1,410 (first-floor) 3,290 (first-floor) 1,927 (second-floor) 799 (second-floor). 1,974 (second-floor) The company allocates 65% of total rent expense to the first floor and 35% 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. Step 1: Allocate total rent expense between the two floors. First floor Second floor Totals Amount Allocated % of Total Cost % 96 Step 2: Allocate these portions of total rent expense across the departments occupying each floor. First Floor Sq. Feet % of Total Cost Jewelry Dept. 96 Cosmetics Dept 96 Totals 96 Second Floor Sq. Feet % of Total Cost Housewares Dept. % Tools Dept. 56 Shoes Dept. 56 The company allocates 65% of total rent expense to the first floor and 35% 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. Step 1: Allocate total rent expense between the two floors. First floor Second floor Totals Amount Allocated % of Total Cost % 96 % Step 2: Allocate these portions of total rent expense across the departments occupying each floor First Floor Sq. Feet % of Total Cost Jewelry Dept. % Cosmetics Dept. % Totals 96 Second Floor Housewares Dept Sq. Feet % of Total Cost % Tools Dept. 56 Shoes Dept. 96 96 Total