Dartmouth Building Products Inc. provides the following information.
Corporate advertising costs = $850,000
Division A - $5,000,000
Division B - $20,000,000
Number of ads run relevant on Division A products 500
Number of ads run relevant to Division B products 3667
Assume that customers with higher revenues benefited more from corporate advertising costs than customers with lower revenues. What is the allocated corporate costs for Division A?
A) $748,000
B) $212,500
C) $170,000
D) $850,000

Question

Quizplus · Accepted Answer

Allocated corporate cost for Division A = $5,000,000 / ($5,000,000 + $20,000,000) ×
$850,000 = $170,000

Dartmouth Building Products Inc. Provides the Following Information