Marks Corporation has two operating departments, Drilling and Grinding, and an office. The three categories of office expenses are allocated to thetwo departments using different allocation bases. The following informationavailable for the current period:Office ExpensesTotalAllocation Basis$ 50,000Number of employeesCost of goods soldSalariesDepreciationAdvertising34,00068,000Net salesItemDrilling GrindingTotalNumber of employees1,800$388,000 $582,000 $970, 000$140,600 $229,400 $370, 0002,7004,500Net salesCost of goods soldThe amount of the total office expenses that should be allocated to Drilling for the current period is:

Office Expenses Overhead Cost Driver Activity Rate Actual Level of Cost Driver for Drilling Assigned Manufacturing Overhead Cost (Activity Rate X Actual Level of Cost Driver) Salaries Number of Employees $ 11.11 per employee 1,800 employees $ 20,000 Depreciation Cost of Goods Sold $ 0.04 per dollar of sales 3,88,000 Dollar Net Sales $ 13,600 Advertising Net Sales $ 0.18 per dollar of Cost of goods sold 1,40,600 Dollar Cost of Goods Sold $ 25,840 Total $ 59,440 Therefore, total expenses that should be allocated to drilling should be $ 59,440.Calculation of Activity Rates Office Expenses Overhead Cost Driver Budgeted overhead Cost (In $) Budgeted Level for Cost Driver Activity Rate (Budgeted Overhead Cost/ Budgeted Level for Cost Driver) (In $) Salaries Number of Employees $ 50,000 4,500 employees $ 11.11 per employee Depreciation Cost of Goods Sold $ 34,000 9,70,000 Net Sales in dollars $ 0.04 per dollar of sales Advertising Net Sales $ 68,000 3,70,000 Cost of Goods sold in dollars $ 0.18 per dollar of Cost of goods sold Total $ 1,52,000

Business

Accounting

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: Office Expenses Total Allocation Basis Salaries $ 50,000 Number of employees Depreciation Advertising 34,000 Cost of goods sold 68,000 Net sales Drilling Grinding 1,800 $388,000 $582,000 $970, 000 $140,600 $229,400 $370, 000 Item Total Number of employees 2,700 4,500 Net sales Cost of goods sold The amount of the total office expenses that should be allocated to Drilling for the current period is:

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: Office Expenses Total Allocation Basis Salaries $ 50,000 Number of employees Depreciation Advertising 34,000 Cost of goods sold 68,000 Net sales Drilling Grinding 1,800 $388,000 $582,000 $970, 000 $140,600 $229,400 $370, 000 Item Total Number of employees 2,700 4,500 Net sales Cost of goods sold The amount of the total office expenses that should be allocated to Drilling for the current period is:

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Marks Corporation has two operating departments, Drilling and Grinding, and an office. The three categories of office expenses are allocated to the two operating departments using different allocation bases. The following information is available for the current period: Office Expenses Total Allocation Base Salaries $ 30,000 Number of employees Depreciation 20,000 Cost of goods sold Advertising 40,000 Percentage of total sales Department Number of employees Sales Cost of goods sold Drilling 1,000 $ 325,000 $ 75,000 Grinding 1,500 475,000 125,000 Total 2,500 $ 800,000 $ 200,000 The amount of salaries that should be allocated to Grinding for the current period is:
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Subject :- Accounting
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