The following cost data pertain to the operations of Montgomery Department Stores, Inc., for the month of July.
Corporate legal office salaries $ 64,800
Apparel Department cost of sales—Evendale Store $ 101,500
Corporate headquarters building lease $ 75,600
Store manager’s salary—Evendale Store $ 15,000
Apparel Department sales commission—Evendale Store $ 8,450
Store utilities—Evendale Store $ 14,900
Apparel Department manager’s salary—Evendale Store $ 8,550
Central warehouse lease cost $ 20,900
Janitorial costs—Evendale Store $ 11,000
The Evendale Store is just 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:
A. What is the total amount of the costs listed above that are direct costs of the Apparel Department?
B. What is the total amount of the costs listed above that are direct costs of the Evendale Store?
C. What is the total amount of the Apparel Department’s direct costs that are also variable costs with respect to total departmental sales?

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anthougo anthougo · Answer 1 · 2020-09-20T07:02:59+02:00

Answer:

Montgomery Department Stores, Inc.

A. Direct costs of the Apparel Department:

Cost of sales—Evendale Store $ 101,500

Sales commission—Evendale Store $ 8,450

Manager’s salary—Evendale Store $ 8,550

Total direct costs $118,500

B. Direct costs of the Evendale Store:

Apparel Department cost of sales—Evendale Store $ 101,500

Store manager’s salary—Evendale Store $ 15,000

Apparel Department sales commission—Evendale Store $ 8,450

Store utilities—Evendale Store $ 14,900

Apparel Department manager’s salary—Evendale Store $ 8,550

Janitorial costs—Evendale Store $ 11,000

Total direct costs $159,400

C. Apparel Department's variable direct costs:

Cost of sales—Evendale Store $ 101,500

Sales commission—Evendale Store $ 8,450

Total variable direct costs $109,950

Explanation:

Corporate legal office salaries $ 64,800