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21 December, 07:21

Animer Inc. provides the following information.

Corporate advertising costs = $825,000

Division A-

$4,900,000

Division B-

$7,800,000

Assume that customers with higher revenues benefited more from corporate advertising costs than customers with lower revenues. What is the allocated corporate costs for Division B?

A.

$518,269

B.

$53,593

C.

$318,307

D.

$ 506,693

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Answers (1)
  1. 21 December, 07:25
    0
    D. $506, 693.

    Explanation:

    The proper cost apportioning method to be used is ratio. ratio is an expression of two or more items in mathematical term expressing the proportional relationship between them

    Corporate advertising cost - $825,000

    Division A sales revenue - $4,900,000

    Division B sales revenue - $ 7,800,000

    Total revenue $12,700,000

    Division Being the higher revenue earner = 7,800,000/12,700,000*825,000

    = $506,693
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