ALLOCATING OPERATING EXPENSEMILES DRIVEN Mercado Lopez owns a furniture store that offers free delivery of merchandise delivered
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ALLOCATING OPERATING EXPENSE—MILES DRIVEN Mercado Lopez owns a furniture store that offers free delivery of merchandise delivered within the local area. Mileage records for the three sales departments are as follows:
Department 1: ...36,000 miles
Department 2: ...48,000 miles
Department 3: ...16,000 miles
The cost of using the truck for the last year, including depreciation, was $16,000. Allocate the cost of the truck among the three departments on the basis of miles driven.
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