Maroc acee department store has three departments, and it conducts advertising campaigns that benefit all departments. advertising costs are $116,000 this year, and departmental sales for this year follow.

col1 department department1 department2 department13
col2 sales $ 273,000 445,900 191,100
how much advertising cost is allocated to each department if the allocation is based on departmental sales?

Department 1: $34,800

Department 2: $56,840

Department 3: $24,360

Explanation:

Statement showing allocation of advertisement expenses based on departmental sales:

Department 1:

Percentage of Total sales = (Department 1 sales ÷ Total sales) × 100

                                           = ($273,000 ÷ 910,000) × 100

                                           = 30%

Allocated amount:

= Percentage of Total sales × Advertising costs

= 30% × $116,000

= $34,800

Department 2:

Percentage of Total sales = (Department 2 sales ÷ Total sales) × 100

                                           = ($445,900 ÷ 910,000) × 100

                                           = 49%

Allocated amount:

= Percentage of Total sales × Advertising costs

= 49% × $116,000

= $56,840

Department 3:

Percentage of Total sales = (Department 3 sales ÷ Total sales) × 100

                                           = ($191,100 ÷ 910,000) × 100

                                           = 21%

Allocated amount:

= Percentage of Total sales × Advertising costs

= 21% × $116,000

= $24,360

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