Stark Corporation has two departments, Car Rental and Truck Rental. Central costs may be allocated to the two departments in various ways.

If advertising expense of $456,000 is allocated on the basis of sales, the cost per cost driver rate would be ________.
A) $0.60
B) $1.20
C) $0.40
D) $0.43

Question

Stark Corporation has two departments, Car Rental and Truck Rental. Central costs may be allocated to the two departments in various ways.

If advertising expense of $456,000 is allocated on the basis of sales, the cost per cost driver rate would be ________.
A) $0.60 
B) $1.20 
C) $0.40 
D) $0.43

Quizplus · Accepted Answer

The cost per cost driver rate = $456,000 ÷ ($760,000 + $380,000)] = $0.40

Stark Corporation Has Two Departments, Car Rental and Truck Rental