Macee Department Store has three departments, and it conducts advertising campaigns that benefit all departments. Advertising costs are $140,000 this year, and departmental sales for this year follow. Department Sales 1 $ 155,000 2 291,400 3 173,600 How much advertising cost is allocated to each department if the allocation is based on departmental sales?

D1 = 0.25 * 140,000 = 35,000

D2 = 0.47*140,000 = 65,800

D3 = 0.28*140,000 = 39,200

Explanation:

Giving the following information:

Macee Department Store has three departments, and it conducts advertising campaigns that benefit all departments.

Advertising costs are $140,000 this year.

Departmental sales for this year follow:

Department Sales 1 $ 155,000

Department Sales 2 $291,400

Department Sales 3 $173,600

First, we need to find the weighted average participation in sales:

Total sales = 155,000 + 291,400 + 173,600 = 620,000

Department 1 = 155,000/620,000 = 0.25

Department 2 = 291,400/620,000 = 0.47

Department 3 = 173,600/620,000 = 0.28

Now, we can allocate the advertising costs for each department:

D1 = 0.25 * 140,000 = 35,000

D2 = 0.47*140,000 = 65,800

D3 = 0.28*140,000 = 39,200