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

Question

Quizplus · Accepted Answer

Allocating the departmental costs based on the total sales of each department is the most appropriate allocation basis for an advertising campaign for a storewide sale. This is because the purpose of an advertising campaign is to increase the store's sales, so the departments that generate more sales should bear a higher share of the advertising costs. The other allocation bases, such as floor space, number of items on sale, and number of customers, may not be directly related to the sales generated or the effectiveness of the advertising campaign, and hence may not accurately reflect the contribution of each department to the campaign. Allocating an equal amount of cost to each department may also not be fair, as it does not consider the differences in the potential benefits received by each department.

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