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

question 174

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 salaries that should be allocated to Grinding for the current period is:

• A) $30,000.
• B) $10,000.
• C) $12,500.
• D) $15,000.
• E) $18,000.

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Definitions:

Labour-Management Climate

The overall relationship between employees and management within an organization, including the level of trust, cooperation, communication, and shared goals.

Potential Downsizing

The possibility of reducing the size of a company's workforce to cut costs or improve efficiency.

Effective Restructuring

Entails making significant organizational changes that aim to improve efficiency, reduce costs, or better align the business structure with its strategic objectives.

Outsourcing

The act of hiring third-party vendors to perform services or create goods that traditionally were performed in-house, as a strategy to focus on core business activities.