Three segments (A, B, and C) of Trump Enterprises have net sales of $300,000, $150,000, and $50,000, respectively. A decision is made to allocate the pool of $25,000 of administrative overhead expenses of the home office to the segments, using net sales as the basis for allocation.
a. How much of the $25,000 should be allocated to each segment?
b. If Segment C is eliminated, how much of the $25,000 will be allocated to A and B?