Question

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 $ 31,000​ Number of employees
Depreciation 20,500​ Cost of goods sold
Advertising 41,500​ Net sales
Item Drilling Grinding Total
Number of employees 1080​ 1620​ 2700​
Net sales 326,625​ 477,375​ 804,000​
Cost of goods sold 76,500​ 127,500​ 204,000​
The amount of the total office expenses that should be allocated to Grinding for the current period is (Do not round your intermediate calculations.)
a) $56,054.
b) $46,204.
c) $93,000.
d) $36,954.
e) $600,000.

Answer 1

a) $56,054.

Step-by-step explanation:

The computation of the amount of the total office expenses that should be allocated to Grinding for the current period is shown below:

= Salaries + Depreciation + Advertising

= (31,000 ÷ 2700) × 1620 + (20,500 ÷ 204,000) × 127,500 + (41,500 ÷ 804,000) × 477,375

= $56,054

Hence, the first option is correct