Rent Expense on the Factory Building of $100,000 Is Allocated

question 109

Short Answer

Rent Expense on the Factory Building of $100,000 is allocated to three departments.The cost-allocation base for this expense is number of square feet,which equals 50,000 square feet.Information for the three departments housed in the factory building are as follows:
$\begin{array}{lll} \text {Department }& \text { Square Feet}& \text { Cubic Feet}\\\text { Department A } & 15,000 & 15,000 \\\text { Department B } & 5,000 & 5,000 \\\text { Department C } & 30,000 & 20,000 \\\end{array}$
How much Rent Expense is allocated to the three departments?
$\begin{array}{lll}&\text { Department A }&\text { Department B }&\text { Department C }\\A)&\$ 15,000 & \$ 5,000 & \$ 30,000 \\B)&\$ 37,500 & \$ 12,500 & \$ 50,000 \\C)&\$ 30,000 & \$ 10,000 & \$ 60,000\end{array}$
D) none of the above

• A)&\$ 15,000 & \$ 5,000 & \$ 30,000 \\
• B)&\$ 37,500 & \$ 12,500 & \$ 50,000 \\
• C)&\$ 30,000 & \$ 10,000 & \$ 60,000
• \end{array}\)
• D) none of the above

---

Definitions:

Output Quantity

The total amount of goods or services produced by a company or country within a specific period.

Monopolistic Competition

A market structure characterized by many firms selling products that are similar but not identical, allowing for product differentiation.

ATC

Average Total Cost, which is the total cost divided by the quantity of output produced.

MR

Marginal Revenue is the additional income from selling one more unit of a good; sometimes equal to price.