Yo Department Store incurred $4,000 of indirect advertising costs for its operations. The following data has been collected for the current year for its three departments:
$\begin{array}{lccc}&\text {Shoes }&\text {Cosmetics }&\text {Crafts }\
\text { Sales } & \$ 160,000 & \$ 120,000 & \$ 120,000 \
\text { Direct advertising costs } & \$ 7,000 & \$ 10,000 & \$ 3,000 \
\text { Newspaper ad space } & 62 \% & 20 \% & 18 \%
\end{array}$
-Refer to the figure.How much of the indirect advertising costs will be allocated to the Cosmetics Department if direct advertising costs is the activity driver?

Question

Quizplus · Accepted Answer

The indirect advertising costs are allocated based on the proportion of direct advertising costs. The Cosmetics Department has $10,000 out of a total of $20,000 in direct advertising costs, which is 50%. Therefore, 50% of the $4,000 indirect advertising costs, which is $2,000, will be allocated to the Cosmetics Department.

Yo Department Store Incurred $4,000 of Indirect Advertising Costs for Its