High Traffic Products Corporation has two departments, Small and Large. Central costs could be allocated to the two departments in various ways.

If advertising expense of $432,600 is allocated on the basis of sales, the cost per cost driver rate would be ________.
A) $0.2 per dollar of sales
B) $0.21 per dollar of sales
C) $0.23 per dollar of sales
D) $0.22 per dollar of sales

Question

High Traffic Products Corporation has two departments, Small and Large. Central costs could be allocated to the two departments in various ways.

If advertising expense of $432,600 is allocated on the basis of sales, the cost per cost driver rate would be ________.
A) $0.2 per dollar of sales 
B) $0.21 per dollar of sales 
C) $0.23 per dollar of sales 
D) $0.22 per dollar of sales

Quizplus · Accepted Answer

Cost per cost driver rate = $432,600 ÷ ($320,000 + $1,740,000) = $0.21

High Traffic Products Corporation Has Two Departments, Small and Large