Required information. [The following information applies to the questions displayed below.] National Bank has several departments that occupy both floors of a two-story building. The departmental accounting system has a single account, Building Occupancy Cost, in its ledger. The types and amounts of occupancy costs recorded in this account for the current period follow. Depreciation-Building Interest-Building mortgage Taxes-Building and land Gas (heating) expense Lighting expense Maintenance expense Total occupancy cost $27,000 40,500 12,000 3,750 4,500 8,250 $96,000 The building has 6,000 square feet on each floor. In prior periods, the accounting manager merely divided the $96,000 occupancy cost by 12,000 square feet to find an average cost of $8 per square foot and then charged each department a building occupancy cost equal to this rate times the number of square feet that it occupied. Diane Linder manages a first-floor department that occupies 900 square feet, and Juan Chiro manages a second-floor department that occupies 1,800 square feet of floor space. In discussing the departmental reports, the second-floor manager questions whether using the same rate per square foot for all departments makes sense because the first-floor space is more valuable. This manager also references a recent real estate study of average local rental costs for similar space that shows first-floor space worth $40 per square foot and second-floor space worth $10 per square foot (excluding costs for heating, lighting, and maintenance). Required: 1. Allocate occupancy costs to the Linder and Chiro departments using the current allocation method. (Round cost anstvers to 2 decimal places.)
Required information. [The following information applies to the questions displayed below.] National Bank has several departments that occupy both floors of a two-story building. The departmental accounting system has a single account, Building Occupancy Cost, in its ledger. The types and amounts of occupancy costs recorded in this account for the current period follow. Depreciation-Building Interest-Building mortgage Taxes-Building and land Gas (heating) expense Lighting expense Maintenance expense Total occupancy cost $27,000 40,500 12,000 3,750 4,500 8,250 $96,000 The building has 6,000 square feet on each floor. In prior periods, the accounting manager merely divided the $96,000 occupancy cost by 12,000 square feet to find an average cost of $8 per square foot and then charged each department a building occupancy cost equal to this rate times the number of square feet that it occupied. Diane Linder manages a first-floor department that occupies 900 square feet, and Juan Chiro manages a second-floor department that occupies 1,800 square feet of floor space. In discussing the departmental reports, the second-floor manager questions whether using the same rate per square foot for all departments makes sense because the first-floor space is more valuable. This manager also references a recent real estate study of average local rental costs for similar space that shows first-floor space worth $40 per square foot and second-floor space worth $10 per square foot (excluding costs for heating, lighting, and maintenance). Required: 1. Allocate occupancy costs to the Linder and Chiro departments using the current allocation method. (Round cost anstvers to 2 decimal places.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Required:
1. Allocate occupancy costs to the Linder and Chiro departments using the current allocation method. (Round cost answers to 2
decimal places.)
Department
Linder's Dept.
Chiro's Dept.
Square Footage
Rate.
Total
$
$
0
0
![Required information.
[The following information applies to the questions displayed below.]
National Bank has several departments that occupy both floors of a two-story building. The departmental accounting
system has a single account, Building Occupancy Cost, in its ledger. The types and amounts of occupancy costs recorded
in this account for the current period follow.
Depreciation-Building
Interest-Building mortgage
Taxes-Building and land
Gas (heating) expense
Lighting expense
Maintenance expense
Total occupancy cost
$27,000
40,500
12,000
3,750
4,500
8,250
$96,000
The building has 6,000 square feet on each floor. In prior periods, the accounting manager merely divided the $96,000
occupancy cost by 12,000 square feet to find an average cost of $8 per square foot and then charged each department a
building occupancy cost equal to this rate times the number of square feet that it occupied.
Diane Linder manages a first-floor department that occupies 900 square feet, and Juan Chiro manages a second-floor
department that occupies 1,800 square feet of floor space. In discussing the departmental reports, the second-floor
manager questions whether using the same rate per square foot for all departments makes sense because the first floor
space is more valuable. This manager also references a recent real estate study of average local rental costs for similar
space that shows first floor space worth $40 per square foot and second-floor space worth $10 per square foot (excluding
costs for heating, lighting, and maintenance).
Required:
1. Allocate occupancy costs to the Linder and Chiro departments using the current allocation method. (Round cost anstvers to 2
decimal places.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe485a7df-6286-4e84-b1d5-277bac7f51c0%2F6735dec3-110a-4808-92a9-2cd12d14455b%2Fp9a4ne_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information.
[The following information applies to the questions displayed below.]
National Bank has several departments that occupy both floors of a two-story building. The departmental accounting
system has a single account, Building Occupancy Cost, in its ledger. The types and amounts of occupancy costs recorded
in this account for the current period follow.
Depreciation-Building
Interest-Building mortgage
Taxes-Building and land
Gas (heating) expense
Lighting expense
Maintenance expense
Total occupancy cost
$27,000
40,500
12,000
3,750
4,500
8,250
$96,000
The building has 6,000 square feet on each floor. In prior periods, the accounting manager merely divided the $96,000
occupancy cost by 12,000 square feet to find an average cost of $8 per square foot and then charged each department a
building occupancy cost equal to this rate times the number of square feet that it occupied.
Diane Linder manages a first-floor department that occupies 900 square feet, and Juan Chiro manages a second-floor
department that occupies 1,800 square feet of floor space. In discussing the departmental reports, the second-floor
manager questions whether using the same rate per square foot for all departments makes sense because the first floor
space is more valuable. This manager also references a recent real estate study of average local rental costs for similar
space that shows first floor space worth $40 per square foot and second-floor space worth $10 per square foot (excluding
costs for heating, lighting, and maintenance).
Required:
1. Allocate occupancy costs to the Linder and Chiro departments using the current allocation method. (Round cost anstvers to 2
decimal places.)
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