Respuesta :
The $300,000 in allocated corporate advertising expenses for Division A. These expenses are divided among the divisions based on the proper base.
What does cost allocation entail?
Cost allocation is the procedure of finding, accumulating, and assigning expenses to particular cost objects. An individual product or line of products, a particular service you offer, a task connected to production, or a division or department inside your company can all be considered cost objects.
There may be some overhead expenses that apply to the entire organization and are difficult to attribute to specific divisions or departments. These costs include, but are not limited to, advertising expenses, audit fees, administrative staff salaries, etc. These expenses are divided among the divisions based on the proper base.
Division A $4,500,000 37.50% ($4,500,000 / $12,000,000)
Division B $7,500,000 62.50% ($7,500,000 / $12,000,000)
Total $12,000,000 100%
Corporate advertising expenses allocated for Division A= $800,000 * 37.50
Corporate advertising expenses allocated for Division A= $300,000
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The complete question is:
Animer Inc. provides the following information:
Corporate advertising costs = $800,000
Division A = $4,500,000 total revenues
Division B = $7,500,000 total revenues
Division C = $2,000,000 total costs
Required:
Assume the customers with higher revenues benefitted more form corporate adverting than customers with lower revenues:
1. What is the allocated corporate advertising costs for Division A?
