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1.

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	$	44,000				Number of employees
Depreciation		21,000				Cost of goods sold
Advertising		44,000				Net sales

Item	Drilling				Grinding				Total
Number of employees		900				2,100				3,000
Net sales	$	350,000			$	525,000			$	875,000
Cost of goods sold	$	91,200			$	148,800			$	240,000

The amount of salaries that should be allocated to Grinding for the current period is:

2.

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	$	44,000			Number of employees
Depreciation		21,000			Cost of goods sold
Advertising		44,000			Net sales

Item	Drilling			Grinding			Total
Number of employees		900			2,100			3,000
Net sales	$	350,000		$	525,000		$	875,000
Cost of goods sold	$	91,200		$	148,800		$	240,000

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

3.

A company pays $19,000 per period to rent a small building that has 10,400 square feet of space. This cost is allocated to the company's three departments on the basis of the amount of the space occupied by each. Department One occupies 2,080 square feet of floor space, Department Two occupies 3,120 square feet of floor space, and Department Three occupies 5,200 square feet of floor space. If the rent is allocated based on the total square footage of the space, Department One should be charged rent expense for the period of:

4.

Janko Wellspring Inc. has a pump with a book value of $38,000 and a 4-year remaining life. A new, more efficient pump, is available at a cost of $59,000. Janko can also receive $9,400 for trading in the old pump. The new pump will reduce variable costs by $13,400 per year over its four-year life. Should the pump be replaced?

5.

Based on a predicted level of production and sales of 15,000 units, a company anticipates total variable costs of $48,000, fixed costs of $21,000, and operating income of $81,600. Based on this information, the budgeted amount of contribution margin for 12,000 units would be:

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