Auto market pays 128,000 rent each year for its two story building. The space in
ID: 2355936 • Letter: A
Question
Auto market pays 128,000 rent each year for its two story building. The space in this building is occupied by five dpartments as specified here Paint dep 1200squ. ft 1st floor engine depart 3600 sp ft first floor space window dep 1920 squ ft of second floor space electrical dep 1056 squ feet of second floor space accessory department 1824 square feet of second floor space 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 occpyingt that floor on . Determine the rent expense to be allocated to each department.Explanation / Answer
Rent paid for first floor = 0.65 x 128000 = 83200
Rent paid for second floor = 0.35 x 128000 = 44800
Cost of Paint department = 83200 x 1200/[1200+3600] = 20800
Cost of Engine department = 83200 x 3600/[1200+3600] = 62400
Cost of Window department = 44800 x 1920/[1920+1056+1824] = 17920
Cost of Electrical department = 44800 x 1056/[1920+1056+1824] = 9856
Cost of Accessory department = 44800 x 1824/[1920+1056+1824] = 17024
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