Paul\'s Department Store has three departments: Men\'s, Women\'s and Children\'s
ID: 2467809 • Letter: P
Question
Paul's Department Store has three departments: Men's, Women's and Children's. The store incurred $23,000 of store rental costs in 2013. The departments identified the following cost drivers for 2013: Men's Women's Children's Labor dollars $523,000 $768,000 $233,000 Number of employees 27 37 21 Square footage 2,300 7,300 1,600 Number of sales transactions 293,000 893,000 83,000 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
Square footage is the most appropriate cost driver.
Answer is 3285.71
23000/(2300+7300+1600)
Mens Women Childrens Total Square Footage 2300 7300 1600 11200