=+The manager of the east sales location, Ian Roach, was not happy. He complained that the new allocation method was unfair and would increase his advertising costs significantly over the previous year. The east location sold high volumes of low-priced used cars and most of the corporate advertising budget was related to new car sales.

Following Ian’s complaint, Malcolm decided to take another hard look at what each of the divisions was paying for advertising before the new allocation plan. The results were as follows:

Sales location Number of cars sold in 2014 Advertising cost incurred in 2014 East 3 150 $ 324 000 West 1 080 432 000 North 2 250 648 000 South 2 520 756 000 9 000 $2 160 000 Required 1 Using 2014 data as the cost bases, show the amount of the 2015 advertising cost ($1800000) that would be allocated to each of the divisions under the following criteria:

a Malcolm Gray’s allocation method based on number of cars sold b the stand-alone method c the incremental-allocation method, with divisions ranked on the basis of dollars spent on advertising in 2014.