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

question 120

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

• A) $20,000.
• B) $25,000.
• C) $7,500.
• D) $12,500.
• E) $40,000.

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Definitions:

Accounts Receivable Turnover

A financial ratio that measures how efficiently a company collects revenue by comparing net credit sales to the average accounts receivable.

Days' Sales

A measure of how efficiently a company converts its inventory into sales, typically calculated as days' sales in inventory or days sales outstanding.

Credit Terms

Conditions under which credit is extended by a seller to a buyer, detailing the repayment period, discount for early payment, and penalty for late payment.

Comparative Balance Sheet

Financial statements that show the financial position of a business at different points in time, allowing for comparison.