Question

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

Corporate legal office salaries	$	70,500
Apparel Department cost of sales—Evendale Store	$	105,600
Corporate headquarters building lease	$	48,600
Store manager’s salary—Evendale Store	$	12,300
Apparel Department sales commission—Evendale Store	$	11,350
Store utilities—Evendale Store	$	19,200
Apparel Department manager’s salary—Evendale Store	$	11,800
Central warehouse lease cost	$	23,100
Janitorial costs—Evendale Store	$	13,550

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:

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

Answer-1)-Total direct costs for the Apparel Department- $128750.

Explanation-

Total Direct costs- Apparel Department
Particulars	Amount
	$
Apparel Department cost of sales - Evendale store	105600
Apparel Department sales commission - Evendale store	11350
Apparel Department manager's salary - Evendale store	11800
Direct costs - Apparel Department	128750

2)- Total direct costs for the Evendale Department- $173800.

Explanation-

Total Direct costs- Evendale Department
Particulars	Amount
	$
Apparel Department cost of sales - Evendale store	105600
Store manager's salary - Evendale store	12300
Apparel Department sales commission - Evendale store	11350
Store utilities - Evendale store	19200
Apparel Department manager's salary - Evendale store	11800
Janitorial cost - Evendale store	13550
Direct costs - Evendale store	173800

3)-Total direct costs for the Apparel Department that are also variable costs- $116950

Explanation-

Direct variable costs - Apparel Department
Particulars	Amount
	$
Apparel Department cost of sales - Evendale store	105600
Apparel Department sales commission - Evendale store	11350
Direct variable costs - Apparel Department	116950