4 MC Qu. 95 Marks Corporation has two operating.. Marks Corporation has two oper

Question

4 MC Qu. 95 Marks Corporation has two operating.. 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: 2 poirnts ota $30,000 20,000 40,000 ce Salaries Depreciation Advertising Number of employees Cost of goods sold Net sales Ask Drilling Grinding Total $325,000 $475, 000 $800, 000 s 75,000 $125,000 $200,000 ReferencesItem 1,000 1,500 2,500 Number of employees Net sales Cost of goods sold The amount of depreciation that should be allocated to Drilling for the current period is: Multiple Choice $40,000

Explanation / Answer

Depreciation to be allocated to drilling is 20,000*75,000/200000 = 7500

Allocation of wages Y:Z

Total 19,000

Y & Z Direct wages 2000 & 3500

Remaining 19,000-2000-3500 = 13500 which is required to be allocated evenly. Therefore 13,500/2 = 6750

Total for Y 2000+6750= 8750

Total for Z 3500+6750= 10250

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