Expert Garage pays $128,000 rent each year for its two-story building. The space
ID: 2386673 • Letter: E
Question
Expert Garage pays $128,000 rent each year for its two-story building. The space in this building isoccupied by five departments as specified here.
Paint department . 1,200 square feet of first-floor space PI C3
Engine department ... 3,600 square feet of-first-floor space
...•...
Window department . 1,920 square feet of second-floor space
Electrical department . 1,056 square feet of second-floor space
Accessory department . 1,824 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
aillocates 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. (Round percents to the nearest one-tenth and dollar amounts to the nearest whole dollar.)
Please leave explanation.
Explanation / Answer
Allocate rent expense for each floor to the departments occupying that floor on the basis of space occupied.
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Rent expense allocation to first floor $128,000 x 65% $83,200
" " allocation to second floor $128,000 x 35% $44,800
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Determine the rent expense to be allocated to each department. (Round percents to the nearest one-tenth and dollar amounts to the nearest whole dollar.)
Allocation to Paint dept.
$83,200 x 25% (i.e. 1,200/4,800) $20,800
Allocation to Engine dept.
$83,200 x 75% (i.e. 3,600/4,800) $62,400
Total allocation to first floor $83,200
Allocation to Window dept.
$44,800 x 40% (i.e. 1,920/4,800) $17,920
Allocation to Electrical dept.
$44,800 x 22% (i.e. 1,056/4,800) $9,856
Allocation to Accessory dept.
$44,800 x 38% (i.e. 1,824/4,800) $17,024
Total allocation to second floor $44,800
Total rent expense $128,000
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