All Media Ltd operates three selling departments. Certain indirect expenses are allocated to the selling departments as follows.

Required (a)Prepare a schedule allocating the indirect expenses to the three departments.

(b) Assuming all products are priced so that they provide a 70% gross margin, calculate the contribution of each department and comment on why the business may still choose to keep all three departments.

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Amount Basis of allocation Administration $160 000 Sales Personnel department 84 000 Number of staff Marketing Utilities 25 000 Sales 172 000 Floor space Insurance on inventory 118 000 Average inventory The following information is obtained from store records for the last financial year. Computers Software Accessories $924 000 $264 000 Sales $132 000 Number of staff 5 3 2 Floor space (m2) Average inventory 1 600 $135 360 1 200 1 200 $37 600 $15 040