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 $ 39,000 Number of employees Depreciation 29,000 Cost of goods sold Advertising 68,000 Net sales Item Drilling Grinding Total Number of employees 1,800 2,700 4,500 Net sales $ 368,000 $ 552,000 $ 920,000 Cost of goods sold $ 121,600 $ 198,400 $ 320,000 The amount of depreciation that should be allocated to Drilling for the current period is:

Answer 1

Answer: $53820

Explanation:

The amount of depreciation that should be allocated to Drilling for the current period will be:

Salaries = (39000 × 1800/4500) = 15600

Add: Depreciation = (29000 × 121600/320000) = 11020

Add: Advertising = (68000 × 368000/920000) = 27200

Total = 53820