Y Co allocates advertising expenses to its two departments,A and B,on the basis of sales.For the current year the sales for department A are $200,000 and for department B $800,000 and total advertising expenses are $16,800.The amount allocated to the two departments is:

Question

Quizplus · Accepted Answer

The advertising expenses are allocated on the basis of sales. So, the ratio of sales of department A to that of department B is 200,000:800,000 or 1:4. Therefore, the advertising expenses allocated to department A will be 1/5 of the total expenses and that to department B will be 4/5 of the total expenses. Hence, the amount allocated to department A is $16,800 * 1/5 = $3,360 and that to department B is $16,800 * 4/5 = $13,440.

Y Co Allocates Advertising Expenses to Its Two Departments,A and B,on