Question

The following cost data pertain to the operations of Montgomery Department Stores, Inc., for the month of July.

Corporate legal office salaries	$	64,200
Apparel Department cost of sales—Evendale Store	$	113,700
Corporate headquarters building lease	$	58,500
Store manager’s salary—Evendale Store	$	14,800
Apparel Department sales commission—Evendale Store	$	7,700
Store utilities—Evendale Store	$	11,300
Apparel Department manager’s salary—Evendale Store	$	8,500
Central warehouse lease cost	$	18,800
Janitorial costs—Evendale Store	$	12,550

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.

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?

Answer 1

Computation of Total Direct Cost of Apparel Department
Apparel Department Cost Of Sales	113,700
Apparel Department Sales Commission	7,700
Apparel Department Manager'S Salary	8,500
Total Direct Costs For The Apparel Department	129,900
Computation of Total Direct Cost of Evendal Department
Apparel Department Cost Of Sales	113,700
Store Manager'S Salary	14,800
Apparel Department Sales Commission	7,700
Store Utilities	11,300
Apparel Department Manager'S Salary	8,500
Janitorial Costs	12,550
Total Direct Costs For The Evendal Department	168,550
Computation of Total Variable Cost of Apparel   Department
Apparel Department Cost of Sales-Evendale Store	113,700
Apparel Department Sales Commission-Evendale Store	7,700
Total Variable Cost - Apparel Department	121,400