Data tableRequirements1. Show the amount of the 2020 advertising cost ($1,500.000) that would be allocated to each ofthe divisions under the folowing criteriaa Douglas allocation method based on actual number of cars soldb. The stand-alone method based on the amounts dvisions would have spent on their ounadvertisingc. The incremental-alocation method, with divisions ranked on the basis of dollars they wouldhave spent on advertising in 20202. Which method do you think is most equitable to the divisional sales managers? What otheroptons might President Darren Douglas have for alocating the advertsing costs?Actual Number ofCars Sold in 2020Advertising Costs in 2020 if DivisionsHad Bought the AdvertisingSales LocationEast3,740194,400West1,540496,800North2420648,000South3,300820.80011,0002.160,000TotalPrintPrintDoneDoneMore infoThe manager of the East sales location. Tim Sneed, was not happy. Hecomplained that the new allocation method was unfair and increased hisadvertising costs signiicanty. The East location sold high volumes of low-pricedused cars and most of the corporate advertising budget related to new car sales. Darren Dandy Auto Sales uses different media to advertise its products (television,radio, newspaper, Internet, and so on). At the end of 2019, the company president,Darren Douglas, decided that corporate headquarters would negotiate and pay for alladvertising costs and allocate these costs to each of the company's four sales locationsIf managers had done the same advertising on their own, their advertising costs and theactual number of cars sold would be as follows:H (Click the icon to view the data.)based on number of vehicles sold.(Click the icon to vievw information about the east sales location.)Read the resuirements(Click the icon to view the advertising information.)Requirement 1. Show the amount of the 2020 advertising cost (S1,500,000) that would be allocated to each of the divisions under the following criteria: (a) Douglas' allocation methodbased on actual number of cars sold, (b) the stand-alone method based on the amounts divisions would have spent on their own advertising. (c) the incremental-allocation method,with divisions ranked on the basis of dolars they would have spent on advertising in 2020. (Do not round intermediary calculations. Round the final answer to the nearest whole dollar.Enter a "0" for amount with a zero values.)(a.)(b.)(c.)Cost Allocated Cost Allocated Cost Allocated510,000 s210,000330,000450,000Sales LocationEast135,000West345,000North450,000South570,000More info1.500,000 S1,500,000The managers had already drawn up their advertising plans for 2020 so thecorporate plan would do the same advertising for them as they had planned.Douglas budgeted $1.5 million of total advertising cost for 2020, which was alsothe actual advertising costs in 2020.

As part a and b already computed. Computation of part c is as follows Incremental cost allocation…

Actual Number of Cars Sold in 2020 1. Show the amount of the 2020 advertising cost ($1,500.000) that would be allocated to each of the divisions under the folowing criteria a Douglas allocation method based on actual number of cars sold b. The stand-alone method based on the amounts divisions would have spent on their own advertising c. The incremental-alocation method, with divisions ranked on the basis of dollars they would have spent on advertising in 2020 2. Which method do you think is most equitable to the divisional sales managers? What other options might President Darren Douglas have for alocating the advertising costs? Advertising Costs in 2020 if Divisions Sales Location Had Bought the Advertising East 3,740 194,400 West 1,540 496 800 North 2,420 648,000 3.300 820.800 South 11,000 2,160,000 Total

Actual Number of Cars Sold in 2020 1. Show the amount of the 2020 advertising cost ($1,500.000) that would be allocated to each of the divisions under the folowing criteria a Douglas allocation method based on actual number of cars sold b. The stand-alone method based on the amounts divisions would have spent on their own advertising c. The incremental-alocation method, with divisions ranked on the basis of dollars they would have spent on advertising in 2020 2. Which method do you think is most equitable to the divisional sales managers? What other options might President Darren Douglas have for alocating the advertising costs? Advertising Costs in 2020 if Divisions Sales Location Had Bought the Advertising East 3,740 194,400 West 1,540 496 800 North 2,420 648,000 3.300 820.800 South 11,000 2,160,000 Total

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter2: Building Blocks Of Managerial Accounting

Section: Chapter Questions

Problem 9EA: The cost data for Evencoat Paint for the year 2019 is as follows: Using the high-low method, express...

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