High Traffic Products Corporation Has Two Departments, Small and Large

question 97

Multiple Choice

High Traffic Products Corporation has two departments, Small and Large. Central costs could be allocated to the two departments in various ways.

If total advertising expense of $629,300 is allocated on the basis of sales, the amount allocated to the Large Department would be ________.

• A) $107,300
• B) $558,000
• C) $522,000
• D) $314,650

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Definitions:

Bushels

A unit of volume that is used for measuring agricultural commodities, with the exact size varying by product and region.

Marginal Cost

The money needed to produce an additional unit of a product or service.

Average Variable Cost

The total variable costs divided by the quantity of output produced, representing the variable cost incurred to produce each unit of output.

Marginal Cost

The leap in all-encompassing expenses associated with the production of an additional unit of a product or service.