Marsden Company has three departments occupying the following amount of floor space: How much store rent should be allocated to Department 3 if total rent is equal to $200,000? (Do not round intermediate calculations.)
A) $100,000
B) $50,000
C) $66,667
D) None of the answers are correct.

Question

Marsden Company has three departments occupying the following amount of floor space:  How much store rent should be allocated to Department 3 if total rent is equal to $200,000? (Do not round intermediate calculations.)
A) $100,000 
B) $50,000 
C) $66,667 
D) None of the answers are correct.

Quizplus · Accepted Answer

Allocation rate = Total cost to be allocated ÷ Cost driver (allocation base)
Allocation rate = $200,000 ÷ (15,000 sq. ft. + 10,000 sq. ft. + 25,000 sq. ft.) = $200,000 ÷ 50,000 sq. ft. = $4 per sq. ft.
Allocation per cost object = Allocation rate × Weight of the cost driver for that cost object
Allocation to Department 3 = $4 per sq. ft. × 25,000 sq. ft. = $100,000

Marsden Company Has Three Departments Occupying the Following Amount of Floor