Business math

Question

Department A had sales of $100,000.00, Department B had sales of $500,000.00, and total overhead expenses were $62,000.00. The allocation of the overhead to Department A should be

A.) $10,333.33

B.) $100,000.00

C.) $500,000.00

D.) $1,612.00

Answer 1

This is a simple proportion problem.

 

Since department B made more sales, they should have a bigger share of the overhead expenses.

 

$62000 represents the total overhead of the 2 departments so we need the combined sales of $600,000 so we can compare the same types of units.

So department A sold 100,000 out of the 600,000 in sales....0r 1/6 of the total sales.

 

So 1/6 = x/62000.     cross multiply to get

 

6x = 62000     divide by 6 to get

x = 10,333.33

 

Hope this helped.