If the rent is allocated based on the total square footage of the space, department one should be charged rent expense for the period of $6388.
We must ascertain the small building's cost per square foot in order to determine the department's assigned costs.
Rent per square foot costs are calculated as follows: Total rent expense / Total Square Feet of Space = $32,000 / 11700.
The cost of rent per square foot equals $2.73. The department's square footage must now be known in order to calculate the rent expense for Department 1.
Rent costs of Department 1 = Square feet of Department 1 x Per Square feet cost.
Rent Expense of Department 1 = 2340 Sq.ft x $ 2.73.
Rent expense of Department 1 = $6388.
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