In: Accounting
Question 1
Particulars. | Allocated Cost |
Rental | 45,760 |
Sales | 6,240 |
Total Costs | 52,000 |
Working Notes
Increase in Revenue of Rentals = $ 12,32,000
Increase in Revenue of Sales = $ 1,68,000
Total Increase in Sales Revenue = Increase in Revenue of Rentals + Increase in Revenue of Sales
= 12,32,000 + 1,68,000
= $ 14,00,000
Cost Allocation to Rental = General Promotion Costs * Increase in Revenue for Rental / Total Increase in Sales Revenue
= 52,000 * 12,32,000 / 14,00,000
= $ 45,760
Cost Allocation to Sales = General Promotion Costs * Increase in Revenue for Sales / Total Increase in Sales Revenue
= 52,000 * 168,000 / 14,00,000
= $ 6,240
Question 2
Particulars. | Allocated Cost |
Rental | 28,600 |
Sales | 23,400 |
Total Costs | 52,000 |
Working Notes
Increase in Profit of Rentals = $ 167,200
Increase in Profit of Sales = $ 136,800
Total Increase in Profit = Increase in Profit of Rentals + Increase in Profit of Sales
= 167,200 + 136,800
= $ 304,000
Cost Allocation to Rental = General Promotion Costs * Increase in Profit for Rental / Total Increase in Profit
= 52,000 * 167,200 / 304,000
= $ 28,600
Cost Allocation to Sales = General Promotion Costs * Increase in Profit for Sales / Total Increase in Profit
= 52,000 * 136,800 / 304,000
= $ 23,400