Reference no: EM131815240

Question - Johnny's Markets has three grocery stores in the metropolitan Philadelphia area. Central costs are allocated using sales as the cost-allocation base. The following are budgeted and actual sales during November:

Sunnyville Wedgewood Capital

Budgeted sales $600,000 $1,000,000 $400,000

Actual sales 600,000 700,000 500,000

Central costs of $200,000 are to be allocated in November.

1. Compute the central costs allocated to each store with budgeted sales as the cost-allocation base.

2. Compute the central costs allocated to each store with actual sales as the cost-allocation base.

3. What advantages are there to using budgeted rather than actual sales for allocating the central costs?