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tester [92]
3 years ago
8

Macee Department Store has three departments, and it conducts advertising campaigns that benefit all departments. Advertising co

sts are $130,000 this year, and departmental sales for this year follow. Department Sales 1 $ 201,000 2 314,900 3 154,100 How much advertising cost is allocated to each department if the allocation is based on departmental sales
Business
1 answer:
DerKrebs [107]3 years ago
8 0

Answer:

Results are below.

Explanation:

Giving the following information:

Estimated overhead costs= $130,000

Total sales= 201,000 + 314,900 + 154,100= $670,000

<u>First, we need to calculate the predetermined overhead rate:</u>

<u></u>

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= 130,000 / 670,000

Predetermined manufacturing overhead rate= $0.194 per sales dollar

<u>Now, we can allocate overhead:</u>

<u></u>

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

1= 201,000*0.194= 38,994

2= 314,900*0.194= 61,090.6

3= 154,100*0.194= 29,895.4

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