Advertising expense totaled $20,000.If indirect advertising costs are allocated based on gross sales per department,what amount would be allocated to the Watches department if $5,000 of advertising is indirect?
Gross Sales: Jewelry,$80,000;Glassware,$30,000;Watches,$40,000.

Question

Quizplus · Accepted Answer

The total gross sales are $80,000 (Jewelry) + $30,000 (Glassware) + $40,000 (Watches) = $150,000. The Watches department's share of gross sales is $40,000/$150,000. The indirect advertising cost to be allocated is $5,000. Therefore, the amount allocated to Watches is ($40,000/$150,000) * $5,000 = $1,333.33, rounded to $1,333.

Advertising Expense Totaled $20,000