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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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