Advertising expense can be reasonably allocated to departments on the basis of each department's proportion of sales.

Question

Quizplus · Accepted Answer

This method of allocation, where the advertising expense is proportionally allocated to each department based on their sales, is commonly used as it is a reasonable way to distribute the cost. It allows departments that generate higher sales to bear a larger share of the expense while also helping to align incentives for the departments to achieve sales targets.

Advertising Expense Can Be Reasonably Allocated to Departments on the Basis