Bank's department store has three departments: men's, women's, and children's. the store incurred $50,000 of store rental costs during the current year. the departments identified the following cost drivers: men's-labor dollars $530,000-number of employees 10-square footage 3,000-number of sales transactions 300,000women's-labor dollars $775,000-number of employees 20-square footage 8,000-number of sales transactions 900,000children's -labor dollars $240,000-number of employees 4-square footage 1,000-number of sales transactions 90,000using the most appropriate cost driver, how much rental cost should be allocated to the women's department?

The $33,335 rental cost should be allocated to the Women's department

Explanation:

In this question, the rental cost should be allocated in the square foot. Because rent is charged according to the square foot.

So, the calculation is shown below:

= (Store Rental cost) × (women square footage ÷ total number of square footage in a year)

where,

Store rental cost is $50,000

Women square footage is 8,000

And, the total square footage equals to

= Men square footage + women square footage + children square footage

= 3,000 + 8,000 + 1,000

= 12,000

Now put these values to the above formula

So, the answer would be equal to

= ($50,000) × (8,000 ÷ 12,000)

= $50,000 × 0.6667

= $33,335

Hence, the $33,335 rental cost should be allocated to the Women's department

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