Wilke Realty separates its activities into two operating divisions: Rentals and Sales. In March, the firm spent...

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Accounting

Wilke Realty separates its activities into two operatingdivisions: Rentals and Sales.
In March, the firm spent $52,000 for general companypromotions (as opposed to
advertisements for specific properties). John, the corporatecontroller, has decided to
allocate general promotion costs to the two operatingdivisions. He is considering
whether to base his allocations on the (1) expected increasein divisional revenue
from the promotions or (2) expected increase in divisionalprofit from the promotions
(before allocated promotion costs). General promotions had thefollowing effects on
the two divisions:

Rentals Sales
Increase in divisional revenue $1,232,000 $168,000
Increase in profit (before allocated promotion costs) 167,200136,800
a. Allocate the total promotion cost to the two divisionsusing change in revenue.
Allocated Cost
Rental Answer
Sales Answer
Total Answer
b. Allocate the total promotion cost to the two divisionsusing change in profit before
joint cost allocation.
Allocated Cost
Rental Answer
Sales Answer
Total Answer

Answer & Explanation Solved by verified expert

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Question 1 Particulars Allocated Cost Rental 45760 Sales 6240 Total Costs 52000 Working Notes Increase in Revenue of Rentals 1232000 Increase in Revenue of Sales 168000 Total Increase in Sales Revenue Increase in See Answer

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