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

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

Corporate legal office salaries

$ 62,600 Apparel Department cost of sales—Evendale Store

$ 98,700 Corporate headquarters building lease

$ 67,800 Store manager’s salary—Evendale Store

$ 18,100 Apparel Department sales commission—Evendale Store

$ 9,000 Store utilities—Evendale Store

$ 12,500 Apparel Department manager’s salary—Evendale Store

$ 9,700 Central warehouse lease cost

$ 17,200 Janitorial costs—Evendale Store

$ 12,000 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?

Expert Answer

 

Direct costs to Apparel Department.

  • Cost of sales = $98700
  • Sales Commision = $9000
  • Manager Salary =$9700

Total   = $117400

Direct Cost to Evendale store.

  • Store Manager salary = $18100
  • Store Utilities = $12500
  • Janitor Cost = $12000
  • Building Lease = $67800

Total    = $110400

  • Central ware house cost is not taken because it is operating for all of companys stores.

​Direct Cost in apparel Department varable to sales.

Cost of Sales = $98700

Sales Commision = $9000

Total = $107700

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