22 - Homework ?? The following information applies to the questions displayed be

Question

22 - Homework ?? The following information applies to the questions displayed below,) National Bank has several departments that occupy both floors of a two-story building. The departmental accounting system has a single account, Building Occupancy Cost, in its ledger. The types and amounts of occupancy costs recorded In this account for the current period follow Depreoiation-Build Isterest-Duilding mortgage Taxes-Building and Land 27,000 40,500 12,000 3,750 (hesting) expense Lighting expense Maintenance expenace Total ooecapaney coat 36,000 The building has 6,000 square feet on each floor. In prior periods, the accounting manager merely divided the $96,000 occupancy cost by 12,000 square feet to find an average cost of $8 per square foot and then charged each department a building occupancy cost equal to this rate times the number of square feet that it occupied. Diane Linder manages a first-floor department that occupies 900 square feet, and Juan Chiro manages a second-floor department that occupies 1,900 square feet of floor space. In discussing the departmental reports, the second-floor manager questions whether using the same rate per square foot for all departments makes sense because the first-floor nces i valuable. This manager also references a recent real estate sfudy of average local rental costs for simlar space that shows first-floor space worth $30 per square foot and second-floor space worth $20 per square foot (excluding costs for heating. lighting, and maintenancel. 2. Allocate the depreciation, interest, and taxes occupancy costs to the Linder and Chiro departments in proportion to the relative market values of the floor space. Allocate the heating. lighting, and maintenance costs to the Linder and Chiro departments in proportion to the square feet occupied (ignoring floor space market values). (Round cost answers to 2 decimal places. Round your intermediate calculations to 2 decimal places.) C Prev of Next

Explanation / Answer

Solution:

Computation of relative market value of space occupied Particulars Square footage Rate Total First floor 6000 $30.00 $180,000.00 second floor 6000 $20.00 $120,000.00 Total $300,000.00

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