1.

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.

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.