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 $ 42,000 Number of employees
Depreciation 22,000 Cost of goods sold
Advertising 45,000 Net sales
Item Drilling Grinding Total
Number of employees 1,200 1,800 3,000
Net sales $ 340,000 $ 510,000 $ 850,000
Cost of goods sold $ 95,000 $ 155,000 $ 250,000

The amount of the total office expenses that should be allocated to Drilling for the current period is:
A. $71,600.

B. $43,160.

C. $109,000.

D. $600,000.

$53,000.

Answer 1

Total Office expense allocated to Drilling for this current period is $43,160

Step-by-step explanation:

Office expense allocation to Drilling

Salaries = $42,000 x 1200 employees/3000 total employee = $16,800

Depreciation = $22,000 x $95,000/ $250,000 total COGS= $8,360

Advertising = $45,000 x $340,000/ $850000 total Sales = $18,000

Total Office expense allocated to Drilling= $43,160