Accounting for IGCSE & O level - Final Statements (Section 10 - No. 35)
Which of the following is the best method to allocate shared expenses (such as rent) between departments in a fair and reasonable manner?
Allocate rent based on the number of employees in each department.
Allocate rent equally between all departments.
Allocate rent based on the proportion of floor space each department occupies.
Allocate rent based on the total sales of each department.
Explication
Allocation based on floor space is the most logical approach, as rent is directly related to the physical space used by each department.