The Budget Analyst for Tire Town Determined That the Volume

Multiple Choice

The budget analyst for Tire Town determined that the volume of tires sold for each product line is the best cost driver for the fixed marketing and administrative costs related to its two tire models.How would you determine the total allocated cost to each of two models of tires for marketing and administrative costs?

A) Divide the total overhead by the total number of tires produced.
B) Calculate the allocation rate per tire.Then multiply the rate by the fixed marketing and administrative costs for each type of tire.Then divide by the fixed marketing and administrative cost pool.
C) Calculate the allocation rate per tire by dividing the fixed marketing and administrative cost pool by the direct labor dollar amount.Then multiply the rate by the fixed marketing and administrative costs for each model of tire.
D) Calculate the allocation rate per tire by dividing the fixed marketing and administrative cost pool by the number of tires.Then multiply the rate by the fixed marketing and administrative costs for each model of tire.