1.Show the amount of the2020 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 advertisingc.The incremental-allocation method, with divisions ranked on the basis of dollars they would have spent on advertising in 20202.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. ### Data Table OverviewThis table presents information on car sales and advertising costs across different regions for the year 2020. The data is segmented into four sales locations: East, West, North, and South.#### Table Columns:1. **Sales Location**: The geographical area where the cars were sold.2. **Actual Number of Cars Sold in 2020**: The quantity of cars sold within each location.3. **Advertising Costs in 2020 if Divisions Had Bought the Advertising**: The hypothetical cost incurred for advertising if each division had independently managed their advertising expenditures.#### Detailed Breakdown:- **East** - Cars Sold: 2,970 - Advertising Costs: $381,600- **West** - Cars Sold: 720 - Advertising Costs: $487,600- **North** - Cars Sold: 2,160 - Advertising Costs: $572,400- **South** - Cars Sold: 3,150 - Advertising Costs: $678,400#### Totals:- **Total Cars Sold**: 9,000- **Total Advertising Costs**: $2,120,000This data provides insights into both the sales performance and the potential advertising expenses in 2020 across different regions. **Transcription and Explanation for Educational Website**---**Overview:**Doug Dandy Auto Sales utilizes various media for advertising, such as television, radio, newspapers, internet, and so on. At the end of 2019, the company president, Doug Dandridge, decided that the corporate headquarters would handle all advertising costs. These costs are then allocated to the company’s four sales locations based on the number of vehicles sold.To view advertising information, click the links provided (Note: This is a hypothetical instruction for interactive purposes).If managers were to handle their advertising independently, their costs and car sales numbers would be as follows:- View relevant data and requirements via additional interactive icons (Note: Hypothetical).**Requirement 1: Allocation Methodology**The primary task is to determine the amount of the 2020 advertising cost ($1,400,000) allocated to each division based on:1. **Dandridge’s Allocation Method:** - Based on the actual number of cars sold.2. **Stand-Alone Method:** - Based on how much each division would have spent independently on advertising.3. **Incremental-Allocation Method:** - Based on the ranking of divisions by the amount they would have spent if they managed their own advertising.The final allocation should be rounded to the nearest whole dollar. If an amount is zero, it should be entered as "0".**Sales Locations and Cost Allocation:**- East: [Enter allocated cost]- West: [Enter allocated cost]- North: [Enter allocated cost]- South: [Enter allocated cost](Note: In an actual webpage, these would be interactive fields for input.)**Graphical Elements:**There were no graphs or diagrams present in the provided image, so there's no additional explanation needed for those.This document serves as an educational guide to understanding cost allocation methodologies within sales divisions, specifically in the context of a centralized advertising budget.

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Answered: Show the amount of the 2020 advertising…

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

1.	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?