Marks Corporation Has Two Operating Departments, Drilling and Grinding, and an Office

question 88

Multiple Choice

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: $\begin{array}{lll}\text { Ottice Expenses } & \text { Total } & \text { Allocation Basis } \\\text { Salaries } & \$ 30,000 & \text { Number of employees } \\\text { Depreciation } & 20,000 & \text { Cost of goods sold } \\\text { Advertising } & 40,000 & \text { Net sales }\end{array}$

$\begin{array}{lrrrr}\text {Item}&\text {Drilling}&\text {Grinding}&\text {Total}\\\text { Number of emplovees } & 1,000 & 1,500 & 2,500 \\\text { Net sales } & \$ 325,000 & \$ 475,000 & \$ 800,000 \\\text { Cost of goods sold } & \$ 75,000 & \$ 125,000 & \$ 200,000\end{array}$
- The amount of the advertising cost that should be allocated to Grinding for the current period is:

• A) $45,000.
• B) $16,250.
• C) $325,000.
• D) $54,250.
• E) $23,750.

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Definitions:

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Greenhouse Gases

Gases in Earth's atmosphere that trap heat, contributing to the greenhouse effect, including carbon dioxide and methane.

Chlorofluorocarbons

Man-made chemical compounds once used in aerosol sprays and refrigerants, known for their damaging effects on the Earth's ozone layer.

Sulphur Dioxide

A toxic gas with a pungent, irritating smell, produced by the combustion of fossil fuels and is a significant component of air pollution.