Question

A company pays $23,000 per period to rent a small building that has 10,800 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 2,160 square feet of floor space, Department Two occupies 3,240 square-feet of floor space, and Department Three occupies 5,400 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.$6,800.
B.$4,600.
C.$4,320.
D.$2,376.
E.$2,160.

Answer 1

Department One should be charged rent expense for the period of $4,600.

Step-by-step explanation:

To calculate the rent expense for Department One, we need to allocate the cost based on the amount of space occupied by each department.

The total square footage of the space is 10,800 square feet. Department One occupies 2,160 square feet, which is 20% of the total space.

Therefore, Department One should be charged rent expense for the period of $23,000 x 20% = $4,600.