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...
icon
Related questions
Question
Data table
Requirements
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 dvisions would have spent on their oun
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
optons might President Darren Douglas have for alocating the advertsing costs?
Actual Number of
Cars Sold in 2020
Advertising Costs in 2020 if Divisions
Had Bought the Advertising
Sales Location
East
3,740
194,400
West
1,540
496,800
North
2420
648,000
South
3,300
820.800
11,000
2.160,000
Total
Print
Print
Done
Done
More info
The manager of the East sales location. Tim Sneed, was not happy. He
complained that the new allocation method was unfair and increased his
advertising costs signiicanty. The East location sold high volumes of low-priced
used cars and most of the corporate advertising budget related to new car sales.
Transcribed Image Text:Data table Requirements 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 dvisions would have spent on their oun 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 optons might President Darren Douglas have for alocating the advertsing costs? Actual Number of Cars Sold in 2020 Advertising Costs in 2020 if Divisions Had Bought the Advertising Sales Location East 3,740 194,400 West 1,540 496,800 North 2420 648,000 South 3,300 820.800 11,000 2.160,000 Total Print Print Done Done More info The manager of the East sales location. Tim Sneed, was not happy. He complained that the new allocation method was unfair and increased his advertising costs signiicanty. The East location sold high volumes of low-priced used 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 all
advertising costs and allocate these costs to each of the company's four sales locations
If managers had done the same advertising on their own, their advertising costs and the
actual 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 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-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 Allocated
510,000 s
210,000
330,000
450,000
Sales Location
East
135,000
West
345,000
North
450,000
South
570,000
More info
1.500,000 S
1,500,000
The managers had already drawn up their advertising plans for 2020 so the
corporate 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 also
the actual advertising costs in 2020.
Transcribed Image Text: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 all advertising costs and allocate these costs to each of the company's four sales locations If managers had done the same advertising on their own, their advertising costs and the actual 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 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-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 Allocated 510,000 s 210,000 330,000 450,000 Sales Location East 135,000 West 345,000 North 450,000 South 570,000 More info 1.500,000 S 1,500,000 The managers had already drawn up their advertising plans for 2020 so the corporate 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 also the actual advertising costs in 2020.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Cost allocation
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Principles of Accounting Volume 2
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Principles of Cost Accounting
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning