Advertising expense totaled $60,000. 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, $20,000. (Round any percentages two decimal places, X.XX%, and round your final answer to the nearest dollar.)

Question

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The total gross sales are $80,000 (jewelry) + $30,000 (glassware) + $20,000 (watches) = $130,000. The watches department's share of gross sales is $20,000 / $130,000 = 15.38%. Therefore, the watches department would be allocated 15.38% of the $5,000 indirect advertising costs, which equals $769 (rounded to the nearest dollar).

Advertising Expense Totaled $60,000