QS 24-5 Allocating costs to departments LO P2 Macee Department Store has three d

Question

QS 24-5 Allocating costs to departments LO P2 Macee Department Store has three departments, and it conducts advertising campaigns that benefit all departments. Advertising costs are $130,000 this year, and departmental sales for this year follow. DepartmentSales $180,000 294,000 126,000 How much advertising cost is allocated to each department if the allocation is based on departmental sales? % of Advertising to Allocated Total Department Sales Allocate Amount $180,000 294.000 126,000 600 0001 0.00%

Explanation / Answer

Department Sales % of total Advertising to allocate Allocated amount 1 180,000 180,000/600,000=30% 130,000 39,000 2 294,000 294,000/600,000=49% 130,000 63,700 3 126,000 126,000/600,000=21% 130,000 27,300 Total 600,000 100% 130,000 130,000

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