Luxurious Department Store Incurred $6,000 of Indirect Advertising Costs for Its

question 156

Multiple Choice

Luxurious Department Store incurred $6,000 of indirect advertising costs for its operations. The following data has been collected for 2018 for its three departments: $\begin{array}{lrrr}&\text { Sportswear } &\text { Lingerie} &\text { Appliance: }\\\text { Sales } & \$ 160,000 & \$ 120,000 & \$ 120,000 \\\text { Direct adverti sing costs } & \$ 7,000 & \$ 12,000 & \$ 3,000 \\\text { Newspaper ad space } & 62 \% & 20 \% & 18 \%\end{array}$
How much of the indirect advertising costs will be allocated to the Sportswear Department if newspaper ad space is the activity driver?

• A)$6,000
• B)$4,340
• C)$3,720
• D)$2,280

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Definitions:

Truck Driver

A professional operator of a truck or large vehicle, responsible for transporting goods and materials from one location to another.

Nonprofit Corporation

An organization formed for purposes other than generating a profit, where none of its income is distributed to its directors or officers.

Ultra Vires

Acts or decisions made by an entity that are beyond the powers conferred by its constitution, charter, or laws.

Lend Money

The act of giving money to another party with the expectation that it will be paid back, usually with interest, over time.