Use the following to answer questions 24-25: Management of Children Are Precious (CAP), an operator of day-care facilities, wants the firm's profit...

CAP's advertising, which is handled by the home office, is not reflected in the preceding figures and amounted to $60,000.

    24.   If advertising expense were allocated to centers based on actual center profitability, how much advertising would be allocated to Irvine?

            A.   $19,800.

            B.   $21,000.

            C.   $30,000.

            D.   $40,543.

            E.   Some other amount.

Answer: D   

    25.   Assume that management used the allocation base that is most influenced by advertising effort and consistent with sound managerial accounting practices. How much advertising would be allocated to Irvine?

            A.   $17,838.

            B.   $19,800.

            C.   $20,000.

            D.   $20,400.

            E.   $21,000.

Answer: E   

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