Management of Children Are Precious (CAP), an Operator of Day-Care

question 34

Multiple Choice

Management of Children Are Precious (CAP) , an operator of day-care facilities, wants the company's profit to be subdivided by center. The firm's accountant has provided the following data: CAP's advertising, which is handled by the home office, is not reflected in the preceding figures and amounted to $60,000.
If advertising expense were allocated to centers based on actual center profitability, the amount of advertising expense allocated to the Irvine center would be closest to:

• A) $19,800.
• B) $21,000.
• C) $30,000.
• D) $40,543.
• E) None of the other answers are correct.

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Definitions:

Vertical Relationships

Business arrangements or transactions between companies that operate at different levels within the same supply chain.

Horizontal Contracts

Agreements between firms or entities at the same level in the supply chain, often to coordinate strategies or manage joint ventures.

Prices

The sum of money needed to buy goods or services.

Synergy

Synergy occurs when the combined effect of a group or system of entities is greater than the sum of their individual effects, often resulting in increased efficiency or productivity.