Answer the following questions using the information below:
King Corporation has two departments, Small and Large. Central costs could be allocated to the two departments in various ways.

-If advertising expense of $300,000 is allocated on the basis of sales, the amount allocated to the Small Department would be:
A)$50,000
B)$75,000
C)$210,000
D)$250,000

Question

Answer the following questions using the information below:
King Corporation has two departments, Small and Large. Central costs could be allocated to the two departments in various ways.
 
-If advertising expense of $300,000 is allocated on the basis of sales, the amount allocated to the Small Department would be:
A)$50,000 
B)$75,000 
C)$210,000 
D)$250,000

Quizplus · Accepted Answer

The allocation is based on sales, and the Small Department's share of sales determines its share of the advertising expense. If the Small Department's sales are 1/6th of the total, then $300,000 * (1/6) = $50,000.

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