QS 22-18C Joint cost allocation LO C3A company purchases a 10,020-square-foot commercial building for $325,000 and spends an additional $50,000 to divide the space into two separate rental units and prepare it for rent. Unit A, which has the desirable location on the corner and contains 3,340 square feet, will be rented for $1.00 per square foot. Unit B contains 6,680 square feet and will be rented for $0.75 per square foot.How much of the joint cost should be assigned to Unit B using the value basis of allocation? **QS 22-18C Joint Cost Allocation LO C3**A company purchases a 10,020-square-foot commercial building for $325,000 and spends an additional $50,000 to divide the space into two separate rental units and prepare it for rent. Unit A, which has the desirable location on the corner and contains 3,340 square feet, will be rented for $1.00 per square foot. Unit B contains 6,680 square feet and will be rented for $0.75 per square foot.How much of the joint cost should be assigned to Unit B using the value basis of allocation?**Table Explanation:**1. **Columns:** - **Market Value:** This column is used to determine the potential income from each unit based on the rentable square feet and the rate per square foot. - **Percent of Market Value:** This section is used to calculate the percentage of the total market value each unit represents. It includes: - **Numerator:** Individual unit's calculated market value. - **Denominator:** Total market value from both units. - **% of Mkt Value:** The calculated percentage that each unit contributes to the total market value. - **Joint Cost:** This column represents the shared cost between the units. - **Apportioned Cost:** This column calculates how much of the total joint cost should be allocated to each unit based on their percentage of market value.2. **Rows:** - **Unit A and Unit B:** Data entry points for calculations of each unit's market value and apportioned costs. - **Totals:** Used for calculating the denominator in the Percent of Market Value and summing apportioned costs.**Note:** The table provides a structure to input values and calculate the requisite percentages and cost allocations necessary for determining the apportioned joint costs for units based on their market value.

Joint costs are costs that are incurred from buying or producing two products at the same time.…

Answered: How much of the joint cost should be…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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QS 22-18C Joint cost allocation LO C3

A company purchases a 10,020-square-foot commercial building for $325,000 and spends an additional $50,000 to divide the space into two separate rental units and prepare it for rent. Unit A, which has the desirable location on the corner and contains 3,340 square feet, will be rented for $1.00 per square foot. Unit B contains 6,680 square feet and will be rented for $0.75 per square foot.

How much of the joint cost should be assigned to Unit B using the value basis of allocation?