Carla's Building Expenses,which Are Indirect,are Based on Each Department's Square

question 112

Multiple Choice

Carla's building expenses,which are indirect,are based on each department's square footage.Department A occupies 35,000 square feet.Department B occupies 55,000 square feet,and Department C occupies 10,000 square feet.If the building expenses total $250,000,how much is allocated to Department B?

• A)$83,333
• B)$137,500
• C)$87,500
• D)$25,000

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Definitions:

Variable Costs

Expenses that change in proportion to the activity of a business, such as the cost of raw materials or production costs.

Variable Costs

Costs that vary directly with the level of production or output.

Financial Performance

A measure of how well a company can use assets to generate earnings, often evaluated through financial statements and ratios.

Modigliani and Miller

Theorists who developed propositions regarding the impact of capital structure on a company's value and its cost of capital, assuming no taxes and market imperfections.