Question

qs 22-6 (algo) allocating costs to departments lo p2 macee store has three operating departments, and it conducts advertising that benefits all departments. advertising costs are $132,000. sales for its operating departments follow. department sales 1 $ 152,500 2 292,800 3 164,700 how much advertising cost is allocated to each operating department if the allocation is based on departmental sales?

Answer 1

To allocate the advertising costs to each operating department based on departmental sales, divide the sales for each department by the total sales and multiply by the advertising costs.

Step-by-step explanation:

To allocate the advertising costs to each operating department based on departmental sales, we need to first calculate the total sales for all departments. The total sales for all departments is $152,500 + $292,800 + $164,700 = $610,000.

Then we can calculate the proportion of sales for each department by dividing the sales for each department by the total sales.

For Department 1: ($152,500 / $610,000) x $132,000 = $33,000

For Department 2: ($292,800 / $610,000) x $132,000 = $63,600

For Department 3: ($164,700 / $610,000) x $132,000 = $35,400

Therefore, the advertising cost allocated to each operating department based on departmental sales is $33,000 for Department 1, $63,600 for Department 2, and $35,400 for Department 3.