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

If total advertising expense of $629,300 is allocated on the basis of sales, the amount allocated to the Large Department would be ________.
A) $107,300
B) $558,000
C) $522,000
D) $314,650

Question

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

If total advertising expense of $629,300 is allocated on the basis of sales, the amount allocated to the Large Department would be ________.
A) $107,300 
B) $558,000 
C) $522,000 
D) $314,650

Quizplus · Accepted Answer

Amount allocated to the Large Department
= $629,300 × ($1,800,000 / $2,170,000) = $522,000

High Traffic Products Corporation Has Two Departments, Small and Large