Sabatini Company has requested that you

(1) Assign indirect expenses to its jewelry and shoes departments as appropriate?

(2) Prepare an income statement for August 201X showing departmental contribution margins along with net income. Assume a 25% tax rate.

Salaries are based on net sales. All other indirect expenses are based on square footage.

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Jewelry (32,000 square feet) Shoes (12,000 square feet) Indirect Cost Net Sales $277,000 $218,000 Cost of Goods Sold 203,000 115,000 Salaries Expense 2,800 1,750 $ 9,900 Depreciation Expense 23,800 21,200 Advertising Expense 850 2,250 22,000 Administrative Expense 32,600 Rent Expense 12,500