Question

A Companys customers owe $28,370 in accounts that are less than 6 months old and 45,430 in accounts that are over 6 months old. The company expects to collect 97.8% of the newer accounts and 74.3% of the others. How much is the estimated loss?

Departments A, B, and C of a factory occupied space as follows: Department A- 120x110 feet; Department B- 60x180; and C- 80x90. If the Total rent was $6,864, how much should be charged to each department based on the number of square feet occupied by each?

Answer 1

New Accounts: $ 28,370 | Collection 97.8% = $28,370 * 97.8% = $27,745.86 | Loss = $ 624.14

Old Accounts: $ 45,430 | Collection 74.3% = $45430 *74.3% = $33,745.5 | Loss =$ 11,675.5

Total Estimated Loss = $ 12,299.64

Rent

Department A = 120*110=91.67 Sq Ft | Allocated Rent = 6864*91.67/216.67 = $2,904.06

Department B = 60*180 = 75 Sq Ft | Allocated Rent = 6864*75/216.67 = $2,375.96

Department C = 80*90= 50 Sq Ft | Allocated Rent = 6864*50/216.67 = $ 1,583.98

Total Area = 216.67 Sq. Ft | Total Rent = $6,864 | Rent/Sq. Ft = 6864/216.67= $31.68