Wilson Company Has Two Departments

question 30

Multiple Choice

Wilson Company has two departments.Relevant information is presented below: Total company-wide advertising costs are $300,000.Assume the allocation base is changed from budgeted sales to actual sales.The amount of advertising costs allocated to Department 1 will ________.

• A)increase $12,500
• B)increase $25,000
• C)decrease $12,500
• D)decrease $25,000

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Definitions:

Mixed Cost

A cost that contains both fixed and variable components, changing with the level of activity but not in direct proportion.

Variable Cost

Variable cost refers to expenses that change directly with the level of production or business activity, such as raw materials and labor costs.

Fixed Cost

Expenses that do not change with the level of production or sales activity, such as rent or salaries.

Work in Process-Department X

Inventory representing partially completed goods that are still in the production process within a specific department.