Doug Dandy Auto Sales uses dferent media to advertise its products (television, radio, newspaper, Internet, and so on). At the end of 2019, the company president, Doug Dandridge, 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 based on number of vehicles sold. (Click the icon to view the advertising information.) If managers had done the same advertising on their own, their advertising costs and the actual number of cars sold would be as follows: I (Click the icon to view the data.) (Click the icon to view information about the east sales location.) Read the ceguirements Requirement 1. Show the amount of the 2020 advertising cost (51,400,000) that would be allocated to each of the divisions under the following criteria: (a) Dandridge's 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 dollars they would have spent on advertising in 2020. (Do not round intermediary calculations. Round the fnal answer to the nearest whole dollar. Enter a "0 for amount with a zero values.) (a.) Sales Location Cost Allocated East West North South
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
More Information
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.
Additional 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 significantly. The East location sold high volumes of low-priced used cars and most of the corporate advertising budget related to new car sales.
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