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 $ 32,000 Number of employees Depreciation 21,000 Cost of goods sold Advertising 43,000 Net sales Item Drilling Grinding Total Number of employees 1,160 1,740 2,900 Net sales $ 328,250 $ 479,750 $ 808,000 Cost of goods sold $ 78,000 $ 130,000 $ 208,000 The amount of the total office expenses that should be allocated to Grinding for the current period is (Do not round your intermediate calculations.)

Answer 1

Answer:

$57,856

Explanation:

Marks Corporation has two operating departments grinding and drilling. To calculate total office expense of Grinding we will allocate the expense as according to their allocations bases

Expense * Grinding allocation basis / total expense of allocation base

Salaries: 32,000 * 1740 / 2900 = 19,200

Depreciation: 21,000 * 130,000 / 208,000 = 13,125

Advertising: 43,000 * 479,750 / 808,000 = 25,531