Chapter-1
Submi&ed By:
Krish Mi(al
1514481
ACC-203-Z02
Problem 1-16
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?
Solu4on:
1) Total Direct Costs of the Apparel Department:
• Apparel Department cost of sales—Evendale Store: $90,000
• Apparel Department sales commission—Evendale Store: $7,000
• Apparel Department manager’s salary—Evendale Store: $8,000
∴Total direct costs of the Apparel Department = $90,000 + $7,000 + $8,000
= $105,000 (Answer)
2) Total Direct Costs of the Evendale Store:
• Apparel Department cost of sales—Evendale Store: $90,000
• Store manager’s salary—Evendale Store: $12,000
• Apparel Department sales commission—Evendale Store: $7,000
• Apparel Department manager’s salary—Evendale Store: $8,000
• Store uVliVes—Evendale Store: $11,000
• Janitorial costs—Evendale Store: $9,000
∴Total direct costs of the Evendale Store = $90,000 + $12,000 + $7,000 + $8,000 + $11,000 +
$9,000
= $137,000 (Answer)
3) Variable costs vary with the level of sales, and based on the given data, we can idenVfy
the following variable costs for the Apparel Department:
• Apparel Department sales commission—Evendale Store: $7,000
• Apparel Department cost of sales—Evendale Store: $90,000
∴Total variable cost of the Apparel Department = $7,000 + $90,000
= $97,000 (Answer)