5TI - Horngren'S Financial And Managerial Accounting

Question

ABC Cleaning Company cleaned 45 offices and incurred costs of $2,340. What was the cost to clean each office?

Step-by-Step Solution

Answer

The cost incurred to clean each office is $52.

Definition of Cost

The costs are defined as the expenditure which is required to create and sell the product or services or to acquire assets.

Computation of cost of cleaning each office

$\begin{array}{c}\mathbf{Costincurredtocleanoffice}\mathbf{=}\frac{\mathrm{Costincurred}}{\mathrm{Numberofofficescleaned}}\\ \mathbf{=}\frac{\$2,340}{45}\\ =\$52\end{array}$