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Arkansas Toys, a Retail Store, Has Three Sales Departments Supported

Question 184

Essay

Arkansas Toys, a retail store, has three sales departments supported by two service departments. Cost and operational data for each department follow:
Purch.
 Sales  Department  Sales  Cost of  Goods Sold  Square  Footage  Orders  Issued 1$92,160$36,8641,7281,260269,12032,8323,0241,680380,64032,2561,2962,310\begin{array} { | c | c | c | c | c | } \hline \begin{array} { c } \text { Sales } \\\text { Department }\end{array} & \text { Sales } & \begin{array} { c } \text { Cost of } \\\text { Goods Sold }\end{array} & \begin{array} { c } \text { Square } \\\text { Footage }\end{array} & \begin{array} { c } \text { Orders } \\\text { Issued }\end{array} \\\hline 1 & \$ 92,160 & \$ 36,864 & 1,728 & 1,260 \\\hline 2 & 69,120 & 32,832 & 3,024 & 1,680 \\\hline 3 & 80,640 & 32,256 & 1,296 & 2,310 \\\hline\end{array}  Service  Departments  Allocation Basis  Cost  Advertising .........  Sales $10,000 Purchasing........  No. of purchase orders issued 12,000\begin{array} { | c | l | r | } \hline \begin{array} { c } \text { Service } \\\text { Departments }\end{array} & { \text { Allocation Basis } } & { \text { Cost } } \\\hline \text { Advertising ......... }& \text { Sales } & \$ 10,000 \\\hline \text { Purchasing........ }& \text { No. of purchase orders issued } & 12,000 \\\hline\end{array} Determine the service department expenses to be allocated to Sales Department 1 for (round answers to whole dollars):
Advertising ________
Purchasing ________

Correct Answer:

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Advertising $92,160 + $69,120 ...

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