Question

A retail store has three departments, S, T, and U, and does general advertising that benefits all departments. Advertising expense totaled $37,000 for the year, and departmental sales were as follows. Allocate advertising expense to Department T based on departmental sales. (Do not round your intermediate calculations.)
Department S $118,000
Department T 212,550
Department U 150,450
Total 481,000

a. $16,350.
b. $14,800.
c. $37,000.
d. $17,467.
e. $11,800.

Answer 1

Answer:

a. $16,350.

Explanation:

The computation of the advertising expense to Department T based on departmental sales is shown below:

= Total advertising expenses × Department T Sales ÷ total sales

= $37,000 × $212,550 ÷ $481,000

= $16,350

By multiplying the total advertising expenses with the department T sales and then divide it by the total sales we can get the allocation amount