Cost Allocation Methods at Walmart

• Values:

• Direct Costs: $100,000,000
• Indirect Costs: $50,000,000
• Allocation Bases: Number of Departments, Sales Revenue
• Requirements:

0. Allocate indirect costs using the number of departments as the allocation base for Walmart.
1. Allocate indirect costs using sales revenue as the allocation base for Walmart.
2. Compare the outcomes of the two cost allocation methods.
3. Discuss the impact of accurate cost allocation on financial reporting and decision-making at Walmart.