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Harman [31]
3 years ago
11

Marks Corporation has two operating departments, Drilling and Grinding, and an office. The three categories of office expenses a

re allocated to the two departments using different allocation bases. The following information is available for the current period:
Office Expenses Total Allocation Basis
Salaries $30,000 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 : ____________
Business
1 answer:
Mashcka [7]3 years ago
7 0

Answer:

Total allocated costs= $63,221.7

Explanation:

<u>First, we need to calculate the allocation rates based on the following formula:</u>

<u></u>

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Salaries= 30,000/2,700= $11.11 per number of employees

Depreciation= 20,500​/204,000= $0.10 per cost of goods sold dollar

Advertising= 41,500/804,000= $0.052 per net sales dollar

<u>Now, we can allocate costs to Grinding:</u>

<u></u>

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Salaries= 11.11*1,620= 17,998.2

Depreciation= 0.10*204,000= 20,400

Advertising= 0.052*477,375= 24,823.5

Total allocated costs= $63,221.7

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