The following information applies to the questions displayed below.] City Bank h
ID: 2549152 • Letter: T
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The following information applies to the questions displayed below.] City Bank has several departments that occupy both floors of a two-story building. The departmental accounting system has a single account, Building Occupancy Cost in its ledger. The types and amounts of occupancy costs recorded in this account for the current period follow. Depreciation-Building nterest-Building mortgage Taxes-Building and land Gas (heating) expense Lighting ee expense Maintenance expense 36,000 54,000 16,000 5,000 6,000 11,000 Total occupancy cost $128,000 The building has 8,000 square feet on each floor In prior periods, the accounting manager merely divided the $128,000 occupancy cost by 16,000 square feet to find an average cost of $8 per square foot and then charged each department a building occupancy cost equal to this rate times the number of square feet that It occupied Laura Diaz manages a first-floor department that occupies 900 square feet, and Lauren Wright manages a second-floor department that occupies 1,800 square feet of floor space. In discussing the departmental reports, the second-floor manager questions whether using the same rate per square foot for all departments makes sense because the first-floor space is more valuable. This manager also references a recent real estate study of average local rental costs for similar space that shows first-floor space worth $40 per square foot and second-floor space worth $10 per square foot (excluding costs for heating, lighting, and maintenance). References Section Break Difficulty: 3 Hard Learning Objective: MacBook ProExplanation / Answer
ans 1 ans 1 Sq footage S Rate R Total S*R Diaz Dept 900 $8 $7,200 Wright Dept 1800 $8 $14,400 ans 2 Sq footage S Rate R Total S*R Diaz Dept 900 $11.98 $10,782 Wright Dept 1800 $4.03 $7,254 working variable cost Gas 5000 Fixed cost Lighting 6000 Depreciation 36000 maintenance 11000 interest 54000 Total 22000 Taxes 16000 floor space 16000 Total 106000 Rate per sq mt 1.38 First floor Second floor Total cost 106000 Relative value 4:1 ratio 84800 21200 106000 Sq mt 8000 8000 per sq mtr of fixed cost 10.60 2.65 per sq mtr of variable cost 1.38 1.38 Total cost per unit 11.98 4.03 If any doubt please comment
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