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College Accounting, Chapters 1-27 ...

22nd Edition
James A. Heintz + 1 other
Publisher: Cengage Learning
ISBN: 9781305666160

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BuyFindarrow_forward

College Accounting, Chapters 1-27 ...

22nd Edition
James A. Heintz + 1 other
Publisher: Cengage Learning
ISBN: 9781305666160
Chapter 25, Problem 2SEA
Textbook Problem
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ALLOCATING OPERATING EXPENSE—SQUARE FEET Weaverling Company rents 10,000 square feet of store space for $36,000 per year. The amount of square footage by department is as follows:

Chapter 25, Problem 2SEA, ALLOCATING OPERATING EXPENSESQUARE FEET Weaverling Company rents 10,000 square feet of store space

Allocate the annual rent expense among the four departments on the basis of relative square feet of floor space occupied.

To determine

Compute the amount of annual rent expense allocated to each of the four departments, based on square feet of floor space used.

Explanation of Solution

Indirect expenses: The expenses that are not directly related to the operations of one department alone, or related to joint or associated departments, are referred to as indirect expenses.

Compute the amount of annual rent expense allocated to each of the four departments, based on square feet of floor space used.

DepartmentSquare FeetPercentage of Total Square Feet×Annual Rent Expense=Allocated Cost
Department A2,6002,600/10,000=26% ×$36,000=$9,360
Department B2,400

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Chapter 25 Solutions

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)
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