A Retail Store Has Three Departments,A,B,and C,each of Which Has

question 200

Essay

A retail store has three departments,A,B,and C,each of which has four full-time employees.The store does general advertising that benefits all departments.Advertising expense totaled $90,000 for the current year,and departmental sales were:
Department A……………… $308,000
Department B……………… 644,000
Department C……………… 448,000
Total sales………………….$1,400,000
Calculate the amount of advertising expense that should be allocated to each department?

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Definitions:

Fixed Costs

These are expenses that do not change with the level of production or sales, such as rent, salaries, and insurance.

Activity Index

A measure used to quantify the level of activity or engagement in a specific area, often used in various financial and operational analysis.

Flexible Budget

A budget that adjusts to different levels of activity, providing a useful comparison for actual costs incurred.

Budgeted Costs

Projected financial expenditures that a company expects to incur during a specified period in the future.