Question: Question 6 Cost Allocation and Divisional Performance [20 marks] Accounting Education Ltd provides tutoring services for students who plan to complete the Association of

Question 6 Cost Allocation and Divisional Performance [20 marks] Accounting Education Ltd provides tutoring services for students who plan to complete the Association of Chartered Certified Accountants program. Accounting Education Ltd has two operating divisions: one in Gold Coast (Gold Coast Division) and the other one in Sydney (Sydney Division). Accounting Education Ltd currently advertises its services through Google Ads. The fixed advertising cost $180,000 is allocated to divisions using divisional revenues as the base. Accounting Education Ltd pays Google Ads a commission fee based on 15% of the increase in divisional revenues. The divisional data are given as follows: Divisional performance data Sydney Divisional revenues (20X1) Divisional revenues (20X2) Divisional costs (20X2) - all costs are variable Divisional profits before allocation of advertising costs (20X2) Additional data (20X2) Fixed advertising cost (in total) Part B [7 marks] Variable advertising cost rate Gold Coast 500,000 $ 620,000 $ 600,000 $ 900,000 440,000 $ 697,000 $ 160,000 $ 203,000 $ 180,000 15.0% Allocate marketing costs to operating divisions and calculate divisional profits after the cost allocation, using the dual rate method.

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