Data related to the income and expenses of the LA Company for the year ending December 31,

Question:

Data related to the income and expenses of the LA Company for the year ending December 31, 2019, follow:

Allocated indirect expenses
Kitchen department..................................$77,900
Bath department.........................................38,400
Interest income.............................................$400
Gross profit
Kitchen department................................$287,500
Bath department.......................................196,500
Direct expenses
Kitchen department................................$135,600
Bath department........................................96,400

Prepare a partial departmental income statement showing the contribution margin and net income of each department.

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...