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 $ 30,000 Number of employees
Depreciation 20,000 Cost of goods sold
Advertising 40,000 Net sales
Item Drilling Grinding Total
Number of employees 1,000 1,500 2,500
Net sales $ 325,000 $ 475,000 $ 800,000
Cost of goods sold $ 75,000 $ 125,000 $ 200,000
a. The amount of salaries that should be allocated to Grinding for the current period is:
Multiple Choice:
1. $30,000.
2. $18,000.
3. $15,000.
4. $10,000.
5. $12,500.
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