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A company incurs advertising costs of $10,000. The company's three selling departments have the following sales: Department 1—$10,000; Department 2—$30,000; Department 3—$40,000. Advertising is allocated based on percent of sales. The amount of advertising allocated to Department 3 will be $.

Question

A company incurs advertising costs of 10,000.Thecompanysthreesellingdepartmentshavethefollowingsales:Department110,000. The company's three selling departments have the following sales: Department 1—10,000; Department 2—30,000;Department330,000; Department 3—40,000. Advertising is allocated based on percent of sales. The amount of advertising allocated to Department 3 will be $.

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Solution 1

To calculate the amount of advertising allocated to Department 3, we first need to find the total sales of all departments.

Step 1: Calculate total sales Total sales = Department 1 sales + Department 2 sales + Department 3 sales Total sales = 10,000+10,000 + 30,000 + 40,000=40,000 = 80,000

Step 2: Calculate the percentage of total sales that Department 3 is responsible for Percentage of total sales for Department 3 = (Department 3 sales / Total sales) * 100 Percentage of total sales for Department 3 = (40,000/40,000 / 80,000) * 100 = 50%

Step 3: Calculate the amount of advertising allocated to Department 3 Advertising allocated to Department 3 = (Percentage of total sales for Department 3 / 100) * Total advertising costs Advertising allocated to Department 3 = (50 / 100) * 10,000=10,000 = 5,000

So, the amount of advertising allocated to Department 3 is $5,000.

This problem has been solved

Solution 2

To calculate the amount of advertising allocated to Department 3, we first need to find the total sales of all departments.

Step 1: Add up all the sales 10,000(Department1)+10,000 (Department 1) + 30,000 (Department 2) + 40,000(Department3)=40,000 (Department 3) = 80,000 (Total Sales)

Step 2: Calculate the percentage of total sales that Department 3 is responsible for 40,000(Department3Sales)/40,000 (Department 3 Sales) / 80,000 (Total Sales) = 0.5 or 50%

Step 3: Multiply the total advertising costs by the percentage of sales Department 3 is responsible for 10,000(AdvertisingCosts)0.5(Department3spercentageoftotalsales)=10,000 (Advertising Costs) * 0.5 (Department 3's percentage of total sales) = 5,000

So, the amount of advertising allocated to Department 3 is $5,000.

This problem has been solved

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