I need help with coat accounting. thanks. **Wilke Realty Promotional Cost Allocation**Wilke Realty divides its operations into two main divisions: Rentals and Sales. In March, the firm allocated $52,000 for general company promotions, which are not specific to any property. John, the corporate controller, needs to decide how to distribute these costs between the two divisions. His decision is based on either:1. The expected increase in divisional revenue because of the promotions.2. The expected increase in divisional profit from the promotions, before deducting the promotional costs.The impact of these general promotions on each division is shown below:| | Rentals | Sales ||-------------------|-------------|-----------|| Increase in divisional revenue | $1,232,000 | $168,000 || Increase in profit (before allocated promotion costs) | 167,200 | 136,800 |**a. Allocation Based on Change in Revenue:**John first considers allocating the total promotion cost according to the change in revenue division:| Allocated Cost | Rentals | Sales | |-------------------|---------|-------|| Rental | $0 | || Sales | | $0 || Total | $0 | |**b. Allocation Based on Change in Profit:**Next, John looks at allocating costs based on the change in profit before the joint cost allocation:| Allocated Cost | Rentals | Sales ||-------------------|---------|-------|| Rental | $0 | || Sales | | $0 || Total | $0 | |The final decision on how to allocate the $52,000 promotional cost depends on whether the priority is on increasing revenues or profits.

General company promotion expenses has been allocated on the basis of (a) Increase in revenue (b) Increase in profits.

Wilke Realty separates its activities into two operating divisions: Rentals and Sales. In March, the firm spent $52,000 for general company promotions (as opposed to advertisements for specific properties). John, the corporate controller, has decided to allocate general promotion costs to the two operating divisions. He is considering whether to base his allocations on the (1) expected increase in divisional revenue from the promotions or (2) expected increase divisional profit from the promotions (before allocated promotion costs). General promotions had the following effects on the two divisions: Rentals Sales Increase in divisional revenue $1,232,000 $168,000 Increase in profit (before allocated promotion costs) 167,200 136,800 a. Allocate the total promotion cost to the two divisions using change in revenue. Allocated Cost Rental $ Sales Total 24 b. Allocate the total promotion cost to the two divisions using change in profit before joint cost allocation.

Wilke Realty separates its activities into two operating divisions: Rentals and Sales. In March, the firm spent $52,000 for general company promotions (as opposed to advertisements for specific properties). John, the corporate controller, has decided to allocate general promotion costs to the two operating divisions. He is considering whether to base his allocations on the (1) expected increase in divisional revenue from the promotions or (2) expected increase divisional profit from the promotions (before allocated promotion costs). General promotions had the following effects on the two divisions: Rentals Sales Increase in divisional revenue $1,232,000 $168,000 Increase in profit (before allocated promotion costs) 167,200 136,800 a. Allocate the total promotion cost to the two divisions using change in revenue. Allocated Cost Rental $ Sales Total 24 b. Allocate the total promotion cost to the two divisions using change in profit before joint cost allocation.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Documents and files related to initiating credit sales would be customer master file and sales…

A: Credit sales are those where the remaining balance is to be paid at a later time. Put differently,…

Q: What is the billing and collection process flow? Group of answer choices 1. If the customer is a new…

A: Billing process flow involves many steps like setting up the product code then setting up customer…

Q: Morgan had net sales of $1,041,105 and average accounts receivable of $157,000. Its competitor,…

A: Accounts Receivable Turnover is the ratio between net sales and average accounts receivable. It is…

Q: Please tell us about Purchases Discounts and Purchases Returns and Allowances. Please indicate the…

A: Purchase discount refers to a form of deduction or declined approved by the seller when the buyer of…

Q: Prepaid expenses are normally created as a part of the purchasing process. Prepaid energy bills,…

A: 1. To determine the accuracy of the remaining prepaid account balance, I would examine the following…

Q: How are sales to customers using credit cards recorded?

A: Net sales means the amount of revenue earned and cost of goods sold means the cost of goods which…

Q: Describe the flow of data in the purchasing process that is initiated when the purchasing…

A: Purchasing process refers to the process of procurement of goods or inventory. It starts with the…

Q: Complete a service blueprint for each of the following post office transactions. Use the service…

A: The service blueprint is a road map for conducting the activities by following a particular…

Q: Where i can used credit union

A: Whenever a group of people collect deposits and use those deposits to give loans, it is known as…

Q: 7) When recording a customer credit card payment on account using QuickBooks, select: A) Create…

A: The following options are clearly evaluated to identify the same method of recording a credit card…

Q: ow to record credit sale in an entrie?

A: Credit sales mean the amount which is delayed to paid but agreed to pay in future by the consumer.

Q: Prepaid expenses are normally created as a part of the purchasing process. Prepaid energy bills,…

A: Prepaid expenses are normally created as a part of the purchasing process. Prepaid energy bills,…

Q: recommendations to improve efficiency in a parts stor

A: Improving efficiency refers to the concept of working on the different aspects of a process in order…

Q: For a Credit Invoice Received, which entry should be made? debit to sales returns and…

A: Journal entry is the process of recording the business transactions in the books of accounts for the…

Q: How do I get my card off here?

A: Hi. You can ask our support team for this.

Q: During a business trip, you pay for expenses using the company credit card. After the trip, you…

A: QuickBooks is a popular accounting software program created and distributed by Intuit. It is…

Q: Why is it important to review your checking account statement? What fees might this help you avoid?

A: Answer:- Account statement :- An account statement is a recurring list of transactions with a start…

Q: When does a company recognize revenue for a sale of a gift card?

A: Gift card: Prepayment which is made by the customer for the future purchase is known as a gift card.…

Q: Which of the following should be done first when a customer order is received? Pull the items from…

A: There are various steps in the management of customer order fulfilment. Customer satisfaction should…

Q: Office Depot is an office supplies retailer. In the month of December 2017 it has the following…

A: T-Account is an informal term that is used in the double entry system of book keeping. Trial balance…

Q: Briefly explain the difference between a sales receipt and an invoice in QuickBooks

A: Note: We’ll answer the first question since the exact one wasn’t specified. Please submit a new…

Question

I need help with coat accounting. thanks.

**Wilke Realty Promotional Cost Allocation**

Wilke Realty divides its operations into two main divisions: Rentals and Sales. In March, the firm allocated $52,000 for general company promotions, which are not specific to any property. John, the corporate controller, needs to decide how to distribute these costs between the two divisions. His decision is based on either:

1. The expected increase in divisional revenue because of the promotions.
2. The expected increase in divisional profit from the promotions, before deducting the promotional costs.

The impact of these general promotions on each division is shown below:

| | Rentals | Sales |
|-------------------|-------------|-----------|
| Increase in divisional revenue | $1,232,000 | $168,000 |
| Increase in profit (before allocated promotion costs) | 167,200 | 136,800 |

**a. Allocation Based on Change in Revenue:**

John first considers allocating the total promotion cost according to the change in revenue division:

| Allocated Cost | Rentals | Sales |
|-------------------|---------|-------|
| Rental | $0 | |
| Sales | | $0 |
| Total | $0 | |

**b. Allocation Based on Change in Profit:**

Next, John looks at allocating costs based on the change in profit before the joint cost allocation:

| Allocated Cost | Rentals | Sales |
|-------------------|---------|-------|
| Rental | $0 | |
| Sales | | $0 |
| Total | $0 | |

The final decision on how to allocate the $52,000 promotional cost depends on whether the priority is on increasing revenues or profits.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

You have established your performance materiality for accounts payable and revenue; now you must determine the posting materiality for individual items. The materiality judgement is at 4%. What is the posting materiality? Show your work. Your work should look like: APPROPRIATE AMOUNT x MATERIALITY JUDGEMENT = POSTING MATERIALITY
how would you check the information provided by an applicant for credit at a department store? by a business applicant at a heavy-equipment manufacturer’s sales office?
Distinguish between a service department and a production department. Give an example of the counterpart of a manufacturer’s “production” departmentin a bank.
can you help with this asap please its for homework
For each of the following, indicate if the statement reflects an input component, output component, or storage component of an accounting information system. 1. A credit card scanner at a grocery store is a(n) [ Select] component. 2. A report of patients who missed appointments at a doctor's office is a(n) [ Select] component. 3. Electronic files containing a list of current customers is aln) [ Select ] component. 4. A list of the day's cash and credit sales is aln) [ Select] component. 5. A purchase order for 1,000 bottles of windshield washing fluid to be used as inventory by an auto parts store is a(n) [ Select ] component.
Describe about the Commercial Paper Program.
Explain how to record the purchase of supplies.
Suppose a co-worker has recorded a cash disbursement twice (Supplies Expense was debited twice for $100 and Cash was credited twice for $100) and wants you to record a correcting entry that will reverse the mistake. The correcting entry will record a debit to the Cash account and a credit to the Supplies account. Would you make this correcting entry? What should you investigate before making a decision about the correcting entry? Are there any other steps you would take to address this issue?