Smart Choices Allocates Advertising Expenses to Its Two Departments, Lifestyle

Multiple Choice

Smart Choices allocates advertising expenses to its two departments, Lifestyle and Storage Solutions, using sales as the cost driver. For the current year the sales for Lifestyle are estimated to be $450,000 and for department Storage Solutions $900,000 and total advertising expenses are budgeted at $110,000. The indirect cost rate is:

A) Lifestyle: $0.24 per sales dollar: Storage Solutions: $0.12 per sales dollar
B) $.036 per sales dollar
C) $.081 per sales dollar
D) $12.27 per sales dollar