1.
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Show the amount of the
2020 advertising cost
($1,500,000) that would be allocated to each of the divisions under the following criteria:
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a. Dobbins'allocation method based on actual number of cars sold |
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b.
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The stand-alone method based on the amounts divisions would have spent on their own advertising
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c.
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The incremental-allocation method, with divisions ranked on the basis of dollars they would have spent on advertising in 2020
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2.
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Which method do you think is most equitable to the divisional sales managers? What other options might President Doug Dobbinshave for allocating the advertising costs? |
More Information:
The manager of the East sales location, Mike Samson, was not happy. He complained that the new allocation method was unfair and increased his advertising costs significantly. The East location sold high volumes of low-priced used cars and most of the corporate advertising budget related to new car sales.
Extracted text: Data table Actual Number of Cars Sold in 2020 Advertising Costs in 2020 if Divisions Had Bought the Advertising Sales Location East 2,970 381,600 West 720 487,600 North 2,160 572,400 3,150 678,400 South 9,000 2,120,000 Total
Extracted text: Doug Dandy Auto Sales uses different media to advertise its products (television, radio, newspaper, Internet, and so on). At the end of 2019, the company president, Doug Dandridge, decided that corporate headquarters would negotiate and pay for alI advertising costs and allocate these costs to each of the company's four sales locations based on number of vehicles sold. If managers had done the same advertising on their own, their advertising costs and the actual number of cars sold would be as follows: H (Click the icon to view the data.) (Click the icon to view information about the east sales location.) (Click the icon to view the advertising information.) Read the resuirements Requirement 1. Show the amount of the 2020 advertising cost ($1,400,000) that would be allocated to each of the divisions under the following criteria: (a) Dandridge's allocation method based on actual number of cars sold, (b) the stand-alone method based on the amounts divisions would have spent on their own advertising. (C) the incremental-allocation method, with divisions ranked on the basis of dollars they would have spent on advertising in 2020. (Do not round intermediary calculations. Round the fnal answer to the nearest whole dollar. Enter a "O" for amount with a zero values.) (a.) Sales Location Cost Allocated East West North South