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Luxurious Department Store Incurred $6,000 of Indirect Advertising Costs for Its

Question 46

Multiple Choice

Luxurious Department Store incurred $6,000 of indirect advertising costs for its operations. The following data has been collected for 2018 for its three departments:  Sportswear  Lingerie Appliance:  Sales $160,000$120,000$120,000 Direct adverti sing costs $7,000$12,000$3,000 Newspaper ad space 62%20%18%\begin{array}{lrrr}&\text { Sportswear } &\text { Lingerie} &\text { Appliance: }\\\text { Sales } & \$ 160,000 & \$ 120,000 & \$ 120,000 \\\text { Direct adverti sing costs } & \$ 7,000 & \$ 12,000 & \$ 3,000 \\\text { Newspaper ad space } & 62 \% & 20 \% & 18 \%\end{array}
How much of the indirect advertising costs will be allocated to the Sportswear Department if newspaper ad space is the activity driver?


A) $6,000
B) $4,340
C) $3,720
D) $2,280

Correct Answer:

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