Store incur $6,000 of indirect advertising cost to operate.

toys tools clothes
direct advertising cost $7,000 $9,000 $1,000
advertising ad space 60% 25% 15%
sales $20,000 $35,000 $50,000

How much of indirect adverstising cost will be allocated to toys if ad space is the allocation base. How much indirect advertising cost of store will be allocated to tools if direct adverstising cost is allocation base. How much indirect adverstising cost will be allocated to clothes if sales is the allocation base

morgaine300

This would be better put in the homework help, or at least under accounting. It's not finance.

Allocating is a basic pro-rating. Whatever base you're using, you add up the amounts to give you the total. Then divide each department by that total, which gives you the proporation that department is using. Use that same proportion on the indirect costs.

i.e. if your bases were 20, 30 and 50, that adds to 100. So 20/100 is a .20 proportion of the total. So use the same .20 proportion on the indirect costs and that's how much would be applied to that department.

Give it a try.