Animer Inc. provides the following information.

Corporate advertising costs = $825,000

Division A-

$4,900,000

Division B-

$7,800,000

Assume that customers with higher revenues benefited more from corporate advertising costs than customers with lower revenues. What is the allocated corporate costs for Division B?

A.

$518,269

B.

$53,593

C.

$318,307

D.

$ 506,693

Question

Business

Zander

23 November, 16:43

Animer Inc. provides the following information.

Corporate advertising costs = $825,000

Division A-

$4,900,000

Division B-

$7,800,000

Assume that customers with higher revenues benefited more from corporate advertising costs than customers with lower revenues. What is the allocated corporate costs for Division B?

A.

$518,269

B.

$53,593

C.

$318,307

D.

$ 506,693

+1

Answers (1)

Know the Answer?

Gwendolyn · Answer 1

D. $506, 693.

Explanation:

The proper cost apportioning method to be used is ratio. ratio is an expression of two or more items in mathematical term expressing the proportional relationship between them

Corporate advertising cost - $825,000

Division A sales revenue - $4,900,000

Division B sales revenue - $ 7,800,000

Total revenue $12,700,000

Division Being the higher revenue earner = 7,800,000/12,700,000*825,000

= $506,693