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24 January, 10:25

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?

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  1. 24 January, 10:31
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    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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