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Marks Corporation has two operating departments, Drilling and Grinding, and an office. The three categories of office expenses are allocated to the two operating departments

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

Office Expenses Total Allocation Base
Salaries $ 30,000 Number of employees
Depreciation 20,000 Cost of goods sold
Advertising 40,000 Percentage of total sales

Department Number of employees Sales Cost of goods sold
Drilling 1,000 $ 325,000 $ 75,000
Grinding 1,500 475,000 125,000
Total 2,500 $ 800,000 $ 200,000

The amount of the advertising cost that should be allocated to Drilling for the current period is:

Multiple Choice

$54,250.

$45,000.

$325,000.

$23,750.

$16,250.

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