2. A company pays $36,000 per perlod to rent a small building that has 12,100 sq

Question

2. A company pays $36,000 per perlod to rent a small building that has 12,100 square feet of space. This cost is allocated to the company's three departments on the basls of the amount of the space occupled by each. Department One occuples 2,420 square feet of floor space, Department Two occuples 3,630 square feet of floor space, and Department Three occupies 6,050 square feet of floor space. If the rent is allocated based on the total square footage of the space, Department One should be charged rent expense for the period of o $10,700. O $7200. O $4840 $2,662 O $2420

Explanation / Answer

Total Square feet = 2420+3630+6050 = 12100

Department 1 Should be Charged

= (2420/12100)*36000 = $7200

Option B is Correct

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