Question

The following cost data pertain to the operations of Rademaker Department Stores, Inc., for the month of March. Corporate headquarters building lease $82,600 Cosmetics Department sales commissions--Northridge Store $5,160 Corporate legal office salaries $60,100 Store manager's salary-Northridge Store $11,300 Heating-Northridge Store $13,500 Cosmetics Department cost of sales--Northridge Store $31,300 Central warehouse lease cost $15,500 Store security-Northridge Store $20,400 Cosmetics Department manager's salary--Northridge Store $4,240 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?

a. $94,340
b. $36,460
c.$40,700
d. $31,300

Answer 1

The answer is c. $40,700.

Step-by-step explanation:

The direct costs of the Cosmetics Department are all the costs which are incurred for the operations & revenue generating activities of the Cosmetics Department only; which may be incurred at the Department itself or at other Department(s)/Store(s) which the purposes are for serving the Cosmestic Department.

Thus, these costs include the following cost items:

Cosmetics Department sales commissions--Northridge Store + Cosmetics Department cost of sales--Northridge Store + Cosmetics Department manager's salary = $5,160 + $31,300 + $4,240 = $40,700.

So, the answer is c. $40,700