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

question 15

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 total office expenses that should be allocated to Drilling for the current period is:

• A) $ 35,750.
• B) $ 90,000.
• C) $600,000.
• D) $ 54,250.
• E) $ 45,000.

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Definitions:

Gastric Secretion

The process of producing and releasing fluids, including hydrochloric acid and digestive enzymes, by the stomach's lining.

Muscularis

A layer of muscle in the walls of hollow organs, such as the gastrointestinal tract, responsible for movement of the organ's contents.

Rugae

Folds or ridges found on internal organ surfaces to increase surface area for secretion and absorption.

Gastric Glands

Glands located in the lining of the stomach that produce gastric juice, including hydrochloric acid and digestive enzymes.