Tutors-R-Us provides academic enrichment and review activities for high school students in 4 subject areas: English, mathematics, science, and history. In November 2010, the firm's information system produced the following data: Regardless of subject area, clients pay $50 per hour for tutoring services. Costs associated with the Tutors-R-Us operations for November 2010 included:
Which of the following is the most logical allocation base for facility rent if the relevant cost object is a subject area (product line)?
A) Number of tutors
B) Direct costs
C) Percentage of square metres occupied
D) Direct labor hours

Question

Tutors-R-Us provides academic enrichment and review activities for high school students in 4 subject areas: English, mathematics, science, and history. In November 2010, the firm's information system produced the following data: Regardless of subject area, clients pay $50 per hour for tutoring services. Costs associated with the Tutors-R-Us operations for November 2010 included:
 Which of the following is the most logical allocation base for facility rent if the relevant cost object is a subject area (product line)?
A) Number of tutors 
B) Direct costs 
C) Percentage of square metres occupied 
D) Direct labor hours

Quizplus · Accepted Answer

Percentage of square metres occupied would be the most logical allocation base for facility rent as it directly relates to the amount of space each subject area (product line) takes up in the facility. This allocation method would allow for a more accurate allocation of rent costs to each product line.

Tutors-R-Us Provides Academic Enrichment and Review Activities for High School