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31 August, 05:59

A retail store has three departments, S, T, and U, and does general advertising that benefits all departments. Advertising expense totaled $50,000 for the year, and departmental sales were as follows. Allocate advertising expense to Department T based on departmental sales. Department S $ 110,000 Department T 213,750 Department U 151,250 Total $ 475,000 Multiple Choice $11,000. $14,000. $16,667. $22,500. $50,000.

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  1. 31 August, 06:10
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    Answer: $22,500

    Explanation:

    First calculate the rate of allocation based on sales to determine how much of Department T's sales should be attributed to Advertising.

    The Rate of Allocation based on Sales = Advertising Expense/Total sales

    = 50,000/475,000

    = 0.105263

    = 10.5263%

    This 10.5% can then be used to find out how much of Advertising to apportion to Department T based on department sales,

    = Department sales * Allocation rate

    = 213,750 * 10.5263%

    = $22,500

    $22,500 should be allocated to Department T.
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