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

question 94

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: $\begin{array}{lll}\text { Office Expenses } & \text { Total } & \text { Allocation Basis } \\\text { Salaries } & \$ 30,00 \mathrm{C} & \text { Number of employees } \\\text { Depreciation } & 20,000 & \text { Cost of goods sold } \\\text { Advertising } & 40,000 & \text { Net sales }\end{array}$ $\begin{array}{lrrr}\text { Item } &{\text { Drilling }} & \text { Grinding } & \text { Total } \\\text { Number of employees } & 1,000 & 1,500& 2,500 \\\text { Net sales } & \$ 325,000 & \$ 475,000 & \$ 800,000 \\\text { Cost of goods sold } & \$ 75,000& \$ 125,000 & \$ 200,000\end{array}$ The amount of salaries that should be allocated to Grinding for the current period is:

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

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Definitions:

Milpa

A traditional Mesoamerican agricultural system that involves the cultivation of maize, beans, squash, and other crops in a rotating cycle, promoting biodiversity and soil health.

Shifting cultivation

An agricultural practice in which plots of land are cultivated temporarily, then abandoned and allowed to revert to their natural vegetation while the cultivator moves on to another plot.

Swidden

A form of agriculture also known as slash-and-burn, where land is cleared by cutting and burning vegetation, then cultivated for several years and left fallow to regain fertility.

Bilateral Contract

A contract involving two parties where each side agrees to fulfill their side of the agreement.