All of Jill Enterprise's operations are housed in one building,with the costs of occupying the building accumulated in a separate account.The total costs incurred in May amounted to $24,000.The company allocates these costs on the basis of square metres of floor space occupied.Administrative offices,sales offices,and factory operations occupy 9,000,6,000,and 30,000 square metres,respectively.How much will be classified as a product cost for May?
A)$3,200
B)$4,800
C)$16,000
D)$24,000

Question

Quizplus · Accepted Answer

To calculate the product cost, we need to allocate the building cost based on square footage. The percentage of the building cost that goes to product cost is calculated by dividing the square footage occupied by factory operations by the total square footage:

Percentage for factory operations = 30,000 sq. ft. ÷ (9,000 sq. ft. + 6,000 sq. ft. + 30,000 sq. ft.) = 60%

Then, we can calculate the product cost itself by multiplying the total building cost by the percentage allocated to product cost:

Product cost = $24,000 x 60% = $16,000

Therefore, the correct answer is C, $16,000, which is the amount that will be classified as a product cost for May.

All of Jill Enterprise's Operations Are Housed in One Building,with