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Dartmouth Building Products Inc. provides the following information. Corporate advertising costs = $860,000 Division A –...

Dartmouth Building Products Inc. provides the following information.

Corporate advertising costs = $860,000

Division A – $4,900,000

Division B – $19,600,000

Number of ads run on Division A products 600

Number of ads run on Division B products 4400

Assume that customers with higher revenues benefited more from corporate advertising costs than customers with lower revenues. What is the allocated corporate costs for Division B?

A.

$172,000
B.

$215,000
C.

$688,000
D.

$756,800
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Answer #1
Allocation of Corporate advertising costs based on revenue to division B
= Corporate advertising costs/ total revenue * revenue of division B
=$860000/($4900000+19600000) *19600000
=$688000
Correct Option: C
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