A Retail Store Has Three Departments,S,T,and U,and Does General Advertising

question 13

Multiple Choice

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.

• A)$11,000.
• B)$14,000.
• C)$16,667.
• D)$22,500.
• E)$50,000.

---

Definitions:

Externality

A consequence of an economic activity experienced by unrelated third parties; can be positive or negative, affecting others not involved in the transaction.

Activity or Transaction

An economic event that involves a transfer or exchange of goods, services, or money between parties.

Environmental Economics

A subfield of economics dealing with the relationship between the economy and the environment, focusing on environmental policies and economic consequences.

Externalities

Economic side effects or consequences that affect uninvolved third parties; can be positive or negative.