Question

Pepper Department store allocates its service department expenses to its various operating (sales) departments. The following data is available for its service departments: Expense Basis for allocation Amount Rent Square feet of floor space $39,000 Advertising Amount of dollar sales $60,000 Administrative Number of employees $90,000 The following information is available for its three operating (sales) departments: Department Square Feet Dollar Sales Number of employees A 4,500 $325,000 21 B 4,900 $345,000 23 C 5,100 $480,000 25 Totals 14,500 $1,150,000 69 What is the total advertising expense allocated to Department C?

Answer 1

Answer:

$25,043

Explanation:

For Department C:

Advertising

Total dollar sales = $1,150,000

Amount of dollar allocated to Department C = $480,000

Advertising expense = $60,000

Total advertising expense allocated to Department C:

= (Advertising expense ÷ Total dollar sales) × Amount of dollar allocated to Department C

= ($60,000 ÷ $1,150,000) × $480,000

= $0.0522 × $480,000

= $25,043