Asked by eliza mason on May 22, 2024
Verified
A company pays $15,000 per period to rent a small building that has 10,000 square feet of space.This cost is allocated to the company's three departments on the basis of the amount of the space occupied by each.Department One occupies 2,000 square feet of floor space,Department Two occupies 3,000 square feet of floor space,and Department Three occupies 5,000 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:
A) $4,400.
B) $3,000.
C) $4,000.
D) $2,200.
E) $2,000.
Rent Expense
The cost incurred by a company for using or occupying property, buildings, or equipment, recognized as an expense in the income statement.
Square Feet
A measurement of area used primarily in the United States, equivalent to the area of a square with sides of one foot.
- Oversee the assignment of costs related to office and various departmental operations.
- Process the apportionment of costs on the basis of identified allocation standards including the measure of occupied space, the tally of employees, or a distinct specified element.
Verified Answer
AR
Andry RasolofosonMay 25, 2024
Final Answer :
B
Explanation :
The rent expense for Department One is calculated based on the proportion of space it occupies. Department One occupies 2,000 square feet out of a total of 10,000 square feet, which is 20% of the total space. Therefore, Department One should be charged 20% of the total rent of $15,000, which is $3,000.
Learning Objectives
- Oversee the assignment of costs related to office and various departmental operations.
- Process the apportionment of costs on the basis of identified allocation standards including the measure of occupied space, the tally of employees, or a distinct specified element.
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