Question

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: Salaries Depreciation Advertising $30,000 Number of employees 20,000Cost of goods sold 40,000 Net sales tem Number of employees 2,500 $325,000 $475,000 $800,000 Cost of goods sold 75,000 $125,000 $200,000 1,000 1,500 The amount of depreciation that should be allocated to Drilling for the current period is $20.000. $25,000 Prev 2 of 10 İİİ Next >

Answer 1

Question 1: Calculate the amount of Depreciation allocated to Drilling as follows: А 1 Total depreciation expense 2 Total cost of goods sold 3 Allocation rate for depreciation 4 Cost of goods sold of Drilling 5 Depreciation allocated to Drilling $20,000 $200.000 0.10 $75,000 $7,500 Calculations are shown below: A B 1 Total depreciation expense 20000 2 Total cost of goods sold 200000 3 Allocation rate for depreciation =B1/B2 4 Cost of goods sold of Drilling 75000 5 Depreciation allocated to Drilling =B3*B4 Question 2: Step 1: Calculate total market value as follows: D 2 AB C Quantity produced Market value at split off point Market value i Particulars (1) (2) (1 x 2) 2 L 200 $8 $1,600 3 M $16 $2,400 Total market value $4,000 150 Step 2: Calculate total cost to be allocated to product M as follows: А B 1 Joint cost 2 Market value of M 3 Total market value 4 Cost to be allocated to product M $660 $2.400 $4.000 $396 Calculations are shown below:

A 1 Joint cost 2 Market value of M 3 Total market value 4 Cost to be allocated to product M 660 =150*16 4000 =(B1*B2/B3 Question 3: Calculate the amount of salaries that should be allocated to Drilling as follows: Α 1 Total salaries expense 2 Total Number of employees 3 Allocation rate for Salaries 4 Number of employees in Drilling department Amount of salaries that should be allocated to Drilling $30,000 2500 $12 1000 $12,000 Calculations are shown below: Α B 1 Total salaries expense 2 Total Number of employees 3 Allocation rate for Salaries 4 Number of employees in Drilling department Amount of salaries that should be 5 allocated to Drilling 30000 2500 =B1/B2 1000 =B3 B4 Question 4: Calculate Purchasing department expense allocated to assembly as follows: $32.000 1 Operating costs of purchasing department 2 Total number of purchase orders 3 Number of purchase orders in Assembly department 4 Purchasing department expense allocated to assembly $6,400

Calculations are shown below: 1 Operating costs of purchasing department 32000 2 Total number of purchase orders =16+4 3 Number of purchase orders in Assembly department 4 Purchasing department expense allocated to assembly l=B1*(4/B2)