The most useful allocation basis for the departmental costs of an advertising campaign for a storewide sale is likely to be:
A) An equal amount of cost for each department.
B) Relative number of items each department had on sale.
C) Proportion of sales of each department.
D) Floor space of each department.
E) Number of customers to enter each department.

Question

Quizplus · Accepted Answer

Proportion of sales of each department is the most appropriate allocation basis for departmental costs of an advertising campaign for a storewide sale because it considers the revenue generated by each department, which is a more accurate reflection of the resource consumption by each department. This method ensures that the departments that contribute more to the sale are charged more for the advertising campaign. Other allocation bases such as floor space, the number of customers, and equal amounts of cost do not accurately reflect the value and contribution of each department to the sale.

The Most Useful Allocation Basis for the Departmental Costs of an Advertising