Question

The following cost data pertain to the operations of Montgomery Department Stores, Inc., for the month of July. Corporate legal office salaries Apparel Department cost of sales-Evendale Store Corporate headquarters building lease Store manager's salary-Evendale Store Apparel Department sales commission-Evendale Store Store utilities-Evendale Store Apparel Department manager's salary-Evendale Store Central warehouse lease cost Janitorial costs-Evendale Store $ 63,900 $ 115,700 $ 45,600 $ 21,200 $ 10,600 $ 13,500 $ 9,350 $ 17,600 $ 9,100 The Evendale Store is one of many stores owned and operated by the company. The Apparel Department is one of many departments at the Evendale Store. The central warehouse serves all of the company's stores. Required: 1. What is the total amount of the costs listed above that are direct costs of the Apparel Department? 2. What is the total amount of the costs listed above that are direct costs of the Evendale Store? 3. What is the total amount of the Apparel Department's direct costs that are also variable costs with respect to total departmental sales? 1. Total direct costs for the Apparel Department 2. Total direct costs for the Evendale Store 3 Total direct costs for the Apparel Department that are also variable costs

Answer 1

Solution :

1.	Total Direct costs for the Apparel Department	$ 135,650
2.	Total Direct costs for the Evendale Store	$ 179,450
3.	Total direct costs for the Apparel Department that are also variable costs	$ 126,300

Working :

(1) Direct costs - Apparel Department

Apparel Department cost of sales - Evendale store	$ 115,700
Apparel Department sales commission - Evendale store	$ 10,600
Apparel Department manager's salary - Evendale store	$ 9,350
Direct costs - Apparel Department	$ 135,650

(2) Direct costs - Evendale store

Apparel Department cost of sales - Evendale store	$ 115,700
Store manager's salary - Evendale store	$ 21,200
Apparel Department sales commission - Evendale store	$ 10,600
Store utilities - Evendale store	$ 13,500
Apparel Department manager's salary - Evendale store	$ 9,350
Janitorial cost - Evendale store	$ 9,100
Direct costs - Evendale store	$ 179,450

(3) Total direct costs for the Apparel Department that are also variable costs

Apparel Department cost of sales - Evendale store	$ 115,700
Apparel Department sales commission - Evendale store	$ 10,600
Total direct costs for the Apparel Department that are also variable costs	$ 126,300

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