Wilke Realty separates its activities into two operating divisions: Rentals and Sales.

In March, the firm spent $52,000 for general company promotions (as opposed to

advertisements for specific properties). John, the corporate controller, has decided to

allocate general promotion costs to the two operating divisions. He is considering

whether to base his allocations on the (1) expected increase in divisional revenue

from the promotions or (2) expected increase in divisional profit from the promotions

(before allocated promotion costs). General promotions had the following effects on

the two divisions:

Rentals Sales

Increase in divisional revenue $1,232,000 $168,000

Increase in profit (before allocated promotion costs) 167,200 136,800

a. Allocate the total promotion cost to the two divisions using change in revenue.

Allocated Cost

Rental Answer

Sales Answer

Total Answer

b. Allocate the total promotion cost to the two divisions using change in profit before

joint cost allocation.

Allocated Cost

Rental Answer

Sales Answer

Total Answer