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1. A company has two departments, Y and Z that incur wage expenses. An analysis of the total wage expense of $20,000 indicates that Dept.

1.

A company has two departments, Y and Z that incur wage expenses. An analysis of the total wage expense of $20,000 indicates that Dept. Y had a direct wage expense of $2,200 and Dept. Z had a direct wage expense of $3,800. The remaining expenses are indirect and analysis indicates they should be allocated evenly between the two departments. Departmental wage expenses for Dept. Y and Dept. Z, respectively, are:

Multiple Choice

  • $9,200; $10,800.

  • $10,800; $9,200.

  • $10,000; $10,000.

  • $2,200; $3,800.

  • $7,000; $7,000.

2.

Marks Corporation has two operating departments, Drilling and Grinding, and an office. The three categories of office expenses are allocated to the two departments using different allocation bases. The following information is available for the current period:

Office Expenses Total Allocation Basis
Salaries $ 48,000 Number of employees
Depreciation 28,000 Cost of goods sold
Advertising 62,000 Net sales

Item Drilling Grinding Total
Number of employees 1,600 2,400 4,000
Net sales $ 366,000 $ 549,000 $ 915,000
Cost of goods sold $ 117,800 $ 192,200 $ 310,000

The amount of depreciation that should be allocated to Grinding for the current period is:

Multiple Choice

  • $28,000.

  • $38,440.

  • $10,640.

  • $17,360.

  • $62,000.

3.

Ready Company has two operating (production) departments: Assembly and Painting. Assembly has 200 employees and occupies 61,200 square feet; Painting has 50 employees and occupies 40,800 square feet. Indirect factory expenses for the current period are as follows:

Administration $ 91,000
Maintenance $ 111,000

Administration is allocated based on workers in each department; maintenance is allocated based on square footage. The total amount of indirect factory expenses that should be allocated to the Painting Department for the current period is:

Multiple Choice

  • $72,800.

  • $66,600.

  • $62,600.

  • $139,400.

  • $125,200.

4.

Ultimo Co. operates three production departments as profit centers. The following information is available for its most recent year. Department 2's contribution to overhead in dollars is:

Dept. Sales Cost of Goods Sold Direct Expenses Indirect Expenses
1 $ 1,300,000 $ 910,000 $ 130,000 $ 104,000
2 520,000 195,000 52,000 130,000
3 910,000 390,000 195,000 26,000

Multiple Choice

  • $273,000.

  • $455,000.

  • $13,000.

  • $338,000.

  • $195,000.

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