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

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