Question

A company pays $18,000 per period to rent a small building that has 10,300 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 2,060 square feet of floor space, Department Two occupies 3,090 square feet of floor space, and Department Three occupies 5,150 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:

Answer 1

Department One Rent Expense for the period is $3,600.

Step-by-step explanation:

Total Rent per period = $18,000

Total Space = 10,300 square feet

Department 1 Space = 2,060 square Feet

Department 1 Rent for the period = ?

Department 1 Rent for the period = Total Rent per period x Department 1 Space / Total Space

Department 1 Rent for the period = $18,000 x 2,060 / 10,300

Department 1 Rent for the period = $18,000 x 0.20

Department 1 Rent for the period = $3,600