Asked by Bailey Goodman on Jun 12, 2024
Verified
Which allocation base is best used to allocate advertising expense by selling department?
A) Square feet of spaced used
B) Gross sales of each department as a percent of total gross sales
C) An even split among all selling departments
D) Some other method not listed
Advertising Expense
Costs incurred in promoting products, services, or the brand as a whole, typically classified as operating expenses on the income statement.
Gross Sales
The total sales generated by a business before any deductions are made for returns, allowances, and discounts.
- Differentiate among the various allocation bases used for different categories of indirect costs.
Verified Answer
NE
Nicholas EltzrothJun 14, 2024
Final Answer :
B
Explanation :
Gross sales of each department as a percent of total gross sales is the best method to allocate advertising expense by selling department because it directly relates the benefit received from advertising to the sales generated, ensuring a fair and proportional allocation of costs.
Learning Objectives
- Differentiate among the various allocation bases used for different categories of indirect costs.