A company pays $16,000 per period to rent a small building that has 10,100 squar

Question

A company pays $16,000 per period to rent a small building that has 10,100 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 2,020 square feet of floor space, Department Two occupies 3,030 square feet of floor space, and Department Three occupies 5,050 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 O $4,040 O $3,200 O $2,222 O $2,020 $4,700

Explanation / Answer

Total square feet = 10,100

Department 1 cost = (2,020/10,100) x $16,000 = $3,200

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