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Department A $800,000 497,000 Department B $450,000 291,000 Sales Cost of goods sold Direct expenses: Salaries Insurance Utilities Depreciation Maintenance 125,000 20,000 24,000 21,000 7,800
Department A $800,000 497,000 Department B $450,000 291,000 Sales Cost of goods sold Direct expenses: Salaries Insurance Utilities Depreciation Maintenance 125,000 20,000 24,000 21,000 7,800 88,000 10,000 14,000 12,000 5,000 The company also incurred the following indirect costs. Salaries Insurance Depreciation Office expenses $36,000 6,000 15,000 50,000 Indirect costs are allocated as follows: salaries on the basis of sales; insurance and depreciation on the basis of square footage; and office expenses on the basis of number of employees. Additional information about the departments follows. Department Square footage Number of employees A 28,000 75 B 12,000 50 Required: 1. Determine the departmental contribution to overhead and the departmental net income for department A and Department B. 2. Should Department B be eliminated? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine the departmental contribution to overhead and the departmental net income for department A and Department B. VORTEX COMPANY Departmental Contribution Statements Department A Department B Sales S 800,000 $ 450,000 Cost of goods sold 497,000 291.000 Gross profit 303,000 159.000 Direct expenses Salaries 125,000 88,000 Insurance 20,000 10,000 Utilities 24 000 14.000 Depreciation 21,000 12.000 Maintenance 7,000 5.000 0 0 Total direct expenses 197.000 129.000 106,000 30.000 Allocated indirect expenses Salaries 23.040 12.960 Insurance 4.200 1.800 Depreciation 10,500 4.500 Office 30,000 20.000 ol 0 Total indirect expenses 67,740 39,260 Operating income (loss) $ 38,260 S (9,260) Vortex Company operates a retail store with two departments. Information about those departments follows. Department A $800,000 497,000 Department B $450,000 291,000 Sales Cost of goods sold Direct expenses: Salaries Insurance Utilities Depreciation Maintenance 125,000 20,000 24,000 21,000 7,000 88,000 10,000 14,000 12,000 5,000 The company also incurred the following indirect costs. Salaries Insurance Depreciation Office expenses $36,000 6,000 15,000 50,000 Indirect costs are allocated as follows: salaries on the basis of sales, insurance and depreciation on the basis of square footage, and office expenses on the basis of number of employees. Additional information about the departments follows. Department B Square footage 28,000 12,000 Number of employees 75 50 Required: 1. Determine the departmental contribution to overhead and the departmental net income for department A and Department B. 2. Should Department B be eliminated? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Should Department B be eliminated? Should Department B be eliminated?
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