Show the amount of the 2020 advertising cost ($1,500,000) that would be allocated to each of the divisions under the following criteria: a. Dobbins'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 2. Which method do you think is most equitable to the divisional sales managers? What other options might President Doug Dobbinshave for allocating the advertising costs? More Information: The manager of the East sales location, Mike Samson, 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
Show the amount of the 2020 advertising cost ($1,500,000) that would be allocated to each of the divisions under the following criteria: a. Dobbins'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 2. Which method do you think is most equitable to the divisional sales managers? What other options might President Doug Dobbinshave for allocating the advertising costs? More Information: The manager of the East sales location, Mike Samson, 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
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter10: Cost Analysis For Management Decision Making
Section: Chapter Questions
Problem 18E
Related questions
Question
1.
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Show the amount of the
2020 advertising cost
($1,500,000) that would be allocated to each of the divisions under the following criteria:
|
|
|
a. Dobbins'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
|
|
2.
|
Which method do you think is most equitable to the divisional sales managers? What other options might President Doug Dobbinshave for allocating the advertising costs? |
More Information:
The manager of the East sales location, Mike Samson, 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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