Paul\'s Department Store has three departments: Men\'s, Women\'s and Children\'s
ID: 2467808 • Letter: P
Question
Paul's Department Store has three departments: Men's, Women's and Children's. The store incurred $28,000 of store rental costs in 2013. The departments identified the following cost drivers for 2013: Men's Women's Children's Labor dollars $528,000 $773,000 $238,000 Number of employees 22 32 16 Square footage 2,800 7,800 1,100 Number of sales transactions 298,000 898,000 88,000 Using the most appropriate cost driver, how much rental cost (rounded to the nearest dollar) should be allocated to the Children's Department?
Explanation / Answer
Rental cost should be allocated on basis of area,here
Rent 28,000 Men's Women's Children's Total Square footage 2,800 7,800 1,100 11,700 Allocation 6,701 18,667 2,632 28,000 28000/11700*2800 28000/11700*7800 28000/11700*1100