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	$	60,600
Apparel Department cost of sales—Evendale Store	$	116,100
Corporate headquarters building lease	$	56,400
Store manager’s salary—Evendale Store	$	18,300
Apparel Department sales commission—Evendale Store	$	7,950
Store utilities—Evendale Store	$	17,800
Apparel Department manager’s salary—Evendale Store	$	9,950
Central warehouse lease cost	$	24,000
Janitorial costs—Evendale Store	$	13,700

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?

Explanation

1.

The direct costs of the Apparel Department are as follows:

Apparel Department cost of sales—Evendale Store	$	116,100
Apparel Department sales commission—Evendale Store		7,950
Apparel Department manager’s salary—Evendale Store		9,950
Total direct costs for the Apparel Department	$	134,000

2.

The direct costs of the Evendale Store are as follows:

Apparel Department cost of sales—Evendale Store	$	116,100
Store manager’s salary—Evendale Store		18,300
Apparel Department sales commission—Evendale Store		7,950
Store utilities—Evendale Store		17,800
Apparel Department manager’s salary—Evendale Store		9,950
Janitorial costs—Evendale Store		13,700
Total direct costs for the Evendale Store	$	183,800

3.

The direct costs in the Apparel Department that are also variable with respect to departmental sales is computed as follows:

Apparel Department cost of sales—Evendale Store	$	116,100
Apparel Department sales commission—Evendale Store		7,950
Total direct costs for the Apparel Department that are also variable costs	$	124,050

Thanks