### Data Table:**Sales Location | Actual Number of Cars Sold in 2020 | Advertising Costs in 2020 If Divisions Had Bought the Advertising**- **East**: 3,740 cars | $194,400- **West**: 1,540 cars | $693,600- **North**: 1,320 cars | $628,800- **South**: 3,300 cars | $633,200**Total**: 9,900 cars | $2,150,000### Requirements:1. **Task:** - Determine the allocation of the 2020 advertising cost ($1,500,000) to each division using the methods below: a. **Douglas Allocation Method**: Based on the actual number of cars sold. b. **Stand-alone Method**: Based on the amounts divisions would have spent on their own advertising. c. **Incremental Allocation Method**: With divisions ranked by dollars they would have spent on advertising in 2020.2. **Question:** - Which method is most equitable for the divisional sales managers? Are there other options President Darren Douglas should consider for allocating advertising costs?### More Info:The manager of the East sales location, Tim Snead, expressed dissatisfaction. He raised concerns that the new allocation method was unfair and disproportionately increased their advertising expenses. The East location primarily sold low-priced used cars, and most corporate advertising was directed towards new car sales. **Darren Dandy Auto Sales Advertising Allocation Exercise****Overview:**Darren Dandy Auto Sales employs various media to market its products, including television, radio, newspapers, and the Internet. At the end of 2019, the company president, Darren Douglas, decided that corporate headquarters would negotiate and pay for all advertising costs. These costs would then be allocated to the company’s four sales locations based on the number of vehicles sold.**Requirements:**1. **Advertising Cost Allocation ($1,500,000) for 2020:** Evaluate how the advertising cost of $1,500,000 would be distributed across the four divisions using the following criteria: - **(a) Douglas' Allocation Method:** Based on the actual number of cars sold. - **(b) Stand-Alone Method:** Based on what each division would have spent on their advertising. - **(c) Incremental-Allocation Method:** Allocates based on the ranking of amounts divisions would have independently spent in 2020. Do not round immediate calculations, but round the final answer to the nearest whole dollar. Enter "0" for zero values.**Table:**```| Sales Location | Cost Allocated (a) | Cost Allocated (b) | Cost Allocated (c) ||----------------|---------------------|---------------------|---------------------|| East | $510,000 | $135,000 | || West | $210,000 | $345,000 | || North | $330,000 | $450,000 | || South | $450,000 | $570,000 | || Total | $1,500,000 | $1,500,000 | |```**More Info:**- For 2020, the managers pre-planned advertising based on corporate suggestions.- Douglas's budget was exactly $1.5 million as both planned and actual advertising costs for 2020.**Additional Interactive Features:**- **View Advertising Information:** Click for more insights on advertising strategies.- **East Sales Location Info:** Click to learn about east location specific details.- **Advertising Requirements:** Refer here for allocation methodology requirements. This exercise helps understand cost allocation in corporate advertising strategies.

As part a and b already computed. Computation of part c is as follows Incremental cost allocation method Primary zone will be south then remaining cost as Incremental to other zonesParticulars Cost Allocation (part C) East $98,551.92 West $251,983.20 North $328,664.88 South $820,800 Total $1,500,000 Remaining cost = 1,500,000- 820,800 = $679,200 Allocated as per $ spend First to North then west and then east in the ratio of 648000:496800:194400 =1,339,200 679200 is distribute as North =48.39% West = 37.10% East = 14.51%

Business

Accounting

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

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

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

What was the division’s ROI for the year?
Please do not give solution in image format thanku
I want the get the solution from requirement a to e
9
7. Jordan Company has two divisions, which reported the following results for the most recent year. Division I Division II Income ₱ 02,700,000 ₱ 00,600,000 Average invested capital ₱ 18,000,000 ₱ 03,000,000 ROI 15% 20% Imputed interest rate = 10% Under residual income, which division is considered to have a better performance? Show solution Group of answer choices Neither Division I nor II Cannot be determined Division I Division II
Divisional income statements with support department allocations Horton Technology has two divisions. Consumer and Commercial and two corporate support departments, Tech Services and Purchasing. The corporate expenses for the year ended December 31, 20Y7, are as follows: ACCT 102 Chapter 24 - Homework assignment take frame Teen Services Department 2770,000 292,000 Purchasing Department Other corporate administrative expenses Total expense The other corporate administrative expenses include officers' salaries and other expenses required by the corporation. The Tech Services Department allocates costs to the divisions based on the number of computers in the department, and the Purchasing Department allocates costs to the divisions based on the number of purchase orders for each department. The services used by the two divisions are as follows: Consumer Division Commercial Division Total Tech Services $1,519,500 260 410 computers 670 457,000 Purchasing 5,100 purchase orders 1,322,900…
Using the data below for the Ace Guitar Company: A Region B Region Sales $500,000 $900,000 Cost of goods sold 200,000 300,000 Selling expenses 150,000 275,000 Support department expenses: Purchasing $90,000 Payroll accounting 30,000 Allocate support department expenses proportional to the sales of each region. Determine the divisional operating income for the A and B regions. For interim calculations, round percentages to one decimal place and all other amounts to the nearest whole dollar. A Region Operating Income $fill in the blank 1 B Region Operating Income $fill in the blank 2
White has a reportable segment if the segment's revenue will total to what amount? The following information pertains to the White Company and its divisions for the year ended December 31, 2014: Sales to unaffiliated customers P10,000,000 Inter-segment sales of products similar to those sold to unaffiliated customers 2,000,000 White Company and all of its divisions are engaged solely in manufɛcturing operations. Your answer
Please do not give solution in image format thanku
Please dont give solutions image based thanks
(J) Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division ADivision BDivision CSales$ 12,120,000$ 28,120,000$ 20,120,000Average operating assets$ 3,030,000$ 7,030,000$ 5,030,000Net operating income$ 496,920$ 449,920$ 503,000Minimum required rate of return7.00%7.50%10.00%Required: 1. Compute the margin, turnover, and return on investment (ROI) for each division. 2. Compute the residual income (loss) for each division. 3. Assume that each division is presented with an investment opportunity that would yield a 8% rate of return. a. If performance is being measured by ROI, which division or divisions will probably accept the opportunity? b. If performance is being measured by residual income, which division or divisions will probably accept the opportunity