The following cost data pertain to the operations of Quinonez Department Stores,

Question

The following cost data pertain to the operations of Quinonez Department Stores, Inc., for the month of September.

Corporate headquarters building lease $ 82,300
Cosmetics Department sales commissions--Northridge Store $ 5,930
Corporate legal office salaries $ 64,400
Store manager's salary-Northridge Store $ 10,000
Heating-Northridge Store $ 20,600
Cosmetics Department cost of sales--Northridge Store $ 37,200
Central warehouse lease cost $ 11,000
Store security-Northridge Store $ 16,500
Cosmetics Department manager's salary--Northridge Store $ 4,190

The Northridge Store is just one of many stores owned and operated by the company. The Cosmetics Department is one of many departments at the Northridge Store. The central warehouse serves all of the company's stores.

What is the total amount of the costs listed above that are direct costs of the Cosmetics Department?

Multiple Choice

a $43,130
b $37,200
c $99,610
d $47,320

Explanation / Answer

Note for understanding : Direct costs are cost which directly attributable or only assign to a particular deparment or division.

Thus for direct cost of the Cosmetics Department only those cost which are assign to on cosmetics department only are to be consider

Direct costs of the Cosmetics Department :

Cosmetics Department cost of sales--Northridge Store +Cosmetics Department sales commissions--Northridge Store + Cosmetics Department manager's salary--Northridge Store

= $37,200 + $5,930 + $4,190 = $47,320 (ie option d)

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