Lacey€™s Department Store allocates its fixed administrative expenses to its four operating departments on the basis of sales dollars. During 2007, the fixed administrative expenses totaled $900,000. These expenses were allocated as follows:

During 2008, the following year, the Women€™s Department doubled its sales. The sales levels in the other three departments remained unchanged. The company€™s 2008 sales data were as follows:

Fixed administrative expenses remained unchanged at $900,000 during 2008.
Required:
1. Using sales dollars as an allocation base, show the allocation of the fixed administrative expenses among the four departments for 2008.
2. Compare your allocation from (1) above to the allocation for 2007. As the manager of the Women€™s Department, how would you feel about the administrative expenses that have been charged to you for 2008?
3. Comment on the usefulness of sales dollars as an allocationbase.

Men's Women's Shoes Housewares Total Total sales-2007$600,000 $1,500,000 $2,100,000 $1,800,000 $6,000,000 Percentage of total sales ._...-... on the above percentages)$90,000 $225.000 315.000 S270,000 $900,000 1096 25% 35% 30% 100% Allocation (based Department Men's Women's Shoes Housewares Total $600,000 $3,000,000 $2,100,000 $1,800,000 $7,500,000 Total sales-2008 Percent of total sales. 8% 40% 28% 24% 100%