Marks Corporation Has Two Operating Departments, Drilling and Grinding, and an Office

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: $\begin{array}{lrrr}\text { Item } & \text { Drilling } & \text { Grinding } & \text { Total } \\\text { Number of employees } & 1,000 & 1,500 & 2,500 \\\text { Net sales } & \$ 325,000 & \$ 475,000 & \$ 800,000 \\\text { Cost of goods sold } & \$ 75,000 & \$ 125,000 & \$ 200,000\end{array}$
The amount of depreciation that should be allocated to Grinding for the current period is:

A) $20,000.
B) $25,000.
C) $7,500.
D) $12,500.
E) $40,000.

Correct Answer:

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