A Company Rents a Small Building with 10,000 Square Feet

question 88

Essay

A company rents a small building with 10,000 square feet of space for $100,000 per year.The rent is allocated to the company's three departments on the basis of the value of the space occupied by each.Department 1 occupies 1,500 square feet of ground-floor space,Department 2 occupies 3,500 square feet of ground-floor space,and Department 3 occupies 5,000 square feet of second-floor space.If rent for comparable floor space in the neighborhood averages $15.00 per sq.ft.for ground-floor space and $10 per sq.ft.for second-floor space,what annual rent expense should be charged to each department?