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linda_us, Master's Degree
Category: Multiple Problems
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According to the cost allocation methods used in the companys

Customer Question

According to the cost allocation methods used in the company’s accounting system and described in the Help section for the Operations Report for any of the four geographic regions, if a company spends $4 million to advertise its camera lines in the Asia-Pacific market, assembles and ships 300,000 entry-level cameras and 100,000 multi-featured cameras to its Asia-Pacific dealers, derives revenues of $60 million from its sales of entry-level cameras and $40 million from the sales of its multi-featured cameras in the Asia-Pacific market, then

60% of the $4 million in advertising expenditures in the Asia-Pacific market will be allocated to the costs of advertising for entry-level cameras and 40% will be allocated to the costs of multi-featured cameras.

75% of the $4 million in advertising expenditures in the Asia-Pacific market will be allocated to the costs of advertising for entry-level cameras and 25% will be allocated to the costs of multi-featured cameras.

the per camera advertising costs for entry-level cameras in the Asia-Pacific market will be $13.33 and the per camera advertising costs for multi-featured cameras will be $20.00.

the per camera advertising costs for both entry-level and multi-featured cameras will be $6.00.

the per camera advertising costs for entry-level cameras will be three times as large as the per camera advertising costs for multi-featured cameras.
Submitted: 5 years ago.
Category: Multiple Problems
Expert:  Mr. Gregory White replied 5 years ago.

TeacherGreg :

Hello, the answer is

TeacherGreg :

"the per camera advertising costs for entry-level cameras will be three times as large as the per camera advertising costs for multi-featured cameras."

TeacherGreg :

Please be sure to hit ACCEPT.

Expert:  linda_us replied 5 years ago.
I disagree with above experts solution

The advertisement cost should be allocated based on increase in Dollar sales

"60% of the $4 million in advertising expenditures in the Asia-Pacific market will be allocated to the costs of advertising for entry-level cameras and 40% will be allocated to the costs of multi-featured cameras."

Also the option

"the per camera advertising costs for entry-level cameras will be three times as large as the per camera advertising costs for multi-featured cameras."

cannot be true as more entry level camera are sold so cost per entry level camera would be less than cost per multi-featured cameras.

Regards

Linda
linda_us, Master's Degree
Satisfied Customers: 7291
Experience: A tutor for Business, Finance, Accounts and other related topics.
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