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