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According to the cost allocation principles used in the company%u2019s accounting systems, if a company spends $2 million on advertising in a given geographic region, sells 300,000 branded pairs online in the region, and sells 2.7 million branded pairs to footwear retailers in the region, then

90% of the company's advertising expenditures would be allocated to wholesale marketing and 10% of the company's advertising expenditures would be allocated to Internet marketing.

50% or $1.5 million of the advertising costs would be allocated to online advertising.
advertising costs per online pair sold would be $6.67.
advertising costs per pair sold online would be $6.67 and advertising costs per pair sold to retailers would be $0.74.
100% of the company's advertising expenditures would be allocated to wholesale marketing.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9956613

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