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 expense to Department T based on departmental sales. (Do not round your intermediate calculations.)

Answer 1

To allocate the advertising expense to Department T based on departmental sales, calculate the ratio of Department T's sales to the total sales of all departments. Then, multiply this ratio by the total advertising expense to determine Department T's allocated advertising expense.

Step-by-step explanation:

To allocate the advertising expense to Department T based on departmental sales, we need to calculate the ratio of Department T's sales to the total sales of all departments. Then, we can multiply this ratio by the total advertising expense to determine Department T's allocated advertising expense.

Let's assume Department T had sales of $100,000, Department S had sales of $200,000, and Department U had sales of $300,000. The total sales for all departments would be $600,000.

The ratio of Department T's sales to the total sales is $100,000 / $600,000 = 1/6.

To allocate the advertising expense, we multiply the ratio by the total advertising expense:

Allocated advertising expense for Department T = (1/6) * $48,000 = $8,000.

Answer 2

From the question given, the values for department S, T, U was not stated, due to my findings and research i solved the example.

The correct answer to this is $21750

Step-by-step explanation:

Given that,

Department S $111,000

Department T 213,150

Department U 146,250

The next step is to calculate Advertising Expenses

Total

Department S $111,000

Department T 213,150

Department U 146,250

Total = 470400

Next step is to allocate advertising expense to Department T based on departmental sales.

Department T = 48000 x 213150/470400

= $21750