Question

A retail store has three departments, S, T, and U, and does general advertising that benefits all departments. Advertising expense totaled $48,000 for the year, and departmental sales were as follows. Allocate advertising expenses to Department T based on departmental sales. (Do not round the intermediate calculations.)
Department S $111,000
Department T 213,150
Department U 146,250
Total 470,400

Answer 1

Answer:

Allocated costs= $21,600

Explanation:

Giving the following information:

Department S $111,000

Department T 213,150

Department U 146,250

Total 470,400

Advertising expense totaled $48,000 for the year.

First, we need to calculate the sales proportion for Department T:

Sales proportion= 213,150 / 470,400= 0.45

Now, we can allocate costs to Department T:

Allocated costs= 48,000*0.45

Allocated costs= $21,600