A retail store has three departments,1,2,and 3,and does general advertising that benefits all departments.Advertising expense totaled $50,000 for the year,and departmental sales were as follows.Allocate advertising expense to Department 2 based on departmental sales. Department 1…………………………..$110,000
Department 2………………………….. 213,750
Department 3………………………….. 151,250
A)$11,000.
B)$14,000.
C)$16,667.
D)$22,500.
E)$50,000.

Question

Quizplus · Accepted Answer

The advertising expense is allocated based on the proportion of sales. Department 2's sales are $213,750 out of a total of $475,000 ($110,000 + $213,750 + $151,250). The allocation for Department 2 is ($213,750 / $475,000) * $50,000 = $22,500.

A Retail Store Has Three Departments,1,2,and 3,and Does General Advertising