Matthew_McCoy_Problem 21-1A

# Matthew_McCoy_Problem 21-1A - 47,000 7,520 3,196 Taxes...

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Matthew McCoy Problem 21-1A 1. Allocate occupancy costs to the Lanya and Jimez departments using the current allocation method Total amounts Lanya Jimez Depreciation - Building 31,500 3,150 5,355 Interest - Building mortgage 47,000 4,700 7,990 Taxes - Building and land 14,000 1,400 2,380 Gas (heating) expense 4,425 442.50 752.25 Lighting expense 5,250 525 892.50 Maintenance expense 9,625 962.50 1,636.25 Total occupancy costs 111,800 11,180 19,006 2. Allocate the depreciation, interest, and taxes occupancy costs to the Lanya and Jimez department in proportion to the relative market values of the floor space. Allocate the heating, lighting, and maintenance costs to the Lanya and Jimez departments in proportion to the square feet occupied (ignoring floor space market values). Total amounts Lanya Jimez Depreciation - Building 31,500 5,040 2,142 Interest - Building mortgage

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Unformatted text preview: 47,000 7,520 3,196 Taxes - Building and land 14,000 2,240 952 Gas (heating) expense 4,425 442.50 752.25 Lighting expense 5,250 525 892.50 Maintenance expense 9,625 962.50 1,636.25 Total occupancy costs 111,800 16,730 9,571 3. Which allocation method would you prefer if you were a manager of a second-floor department? Explain. If I were a manager of a second-floor department, I would prefer the second allocation method, allocating expenses in proportion to the relative market values of the floor space. The cost is significantly less, and because all customers pass departments near the entrance but fewer go beyo the first floor, it would make more sense to have more of those expenses deducted from the floor that has more potential to generate more revenue. d. ts nd...
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## This note was uploaded on 09/24/2011 for the course ACCT 212 taught by Professor Sheik during the Spring '11 term at Mountain State.

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Matthew_McCoy_Problem 21-1A - 47,000 7,520 3,196 Taxes...

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