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April 18, 2014

Homework Help: Managerial Accounting

Posted by Tootsie on Wednesday, March 31, 2010 at 7:19pm.

1) If the Cost were split simply 50-50- than allocated expense would be -
Advertising Expenses - $ 2.5 M for each business and
warehouse expenses - $ 1.5 M for each business

2) As per my view the Advertisement expenses should be allocated in the ratio of sales (150:20) and warehouse expenses should be allocated on the basis of use of floor area (75:25) and according to that - (i) Advertisement expenses- $4.41M would be allocated to unicycle business and balance $0.59M to bicycle business.
(ii) Warehouse expenses- $2.25M would be allocated to unicycle business and balance $0.75M to bicycle business.

3) Too many and less value expenses should be allocated on the basis of sale value.

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