Rent Expense on the Factory Building of $100,000 is allocated to three departmen
ID: 2571516 • Letter: R
Question
Rent Expense on the Factory Building of $100,000 is allocated to three departments. The cost-allocation base for this expense is number of square feet, which equals 50,000 square feet. Information for the three departments housed in the factory building are as follows:
Department Square Feet Cubic Feet
Department A 15,000 15,000
Department B 5,000 5,000
Department C 30,000 20,000
How much Rent Expense is allocated to the three departments?
Department A Department B Department C
A) $15,000 $5,000 $30,000
B) $37,500 $12,500 $50,000
C) $30,000 $10,000 $60,000
D) none of the above
Explanation / Answer
Rent Expense per Square Feet = 100000/50000 = $2 Department A 30000 =15000*2 Department B 10000 =5000*2 Department C 60000 =30000*2 Option C is correct