The following cost data pertain to the operations of Rademaker Department Stores, Inc., for the month of March. The Northridge Store is just one of many stores owned and operated by the company. The Cosmetics Department is one of many departments at the Northridge Store. The central warehouse serves all of the company's stores. What is the total amount of the costs listed above that are direct costs of the Cosmetics Department?
A)$83,000
B)$94,000
C)$90,000
D)$127,000

Question

The following cost data pertain to the operations of Rademaker Department Stores, Inc., for the month of March.  The Northridge Store is just one of many stores owned and operated by the company. The Cosmetics Department is one of many departments at the Northridge Store. The central warehouse serves all of the company's stores. What is the total amount of the costs listed above that are direct costs of the Cosmetics Department?
A)$83,000 
B)$94,000 
C)$90,000 
D)$127,000

Quizplus · Accepted Answer

Direct costs are those that can be traced to a specific cost object, in this case, the Cosmetics Department. The direct costs of the Cosmetics Department are: Cosmetics purchased ($50,000), Wages of Cosmetics Department employees ($22,000), Supplies used in the Cosmetics Department ($12,000), and Allocated portion of central warehouse costs ($10,000). Therefore, the total direct costs of the Cosmetics Department are $50,000 + $22,000 + $12,000 + $10,000 = $94,000.

The Following Cost Data Pertain to the Operations of Rademaker