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Igorithmic 20pts Saved Help Save Vortex Company operates a retail store with two departments. Information about those departments follows. Department a $819, 200 400,000 Department
Igorithmic 20pts Saved Help Save Vortex Company operates a retail store with two departments. Information about those departments follows. Department a $819, 200 400,000 Department B $460,800 299,520 Sales Cost of goods sold Direct expenses: Salaries Insurance Utilities Depreciation Maintenance 118,000 16,500 20,500 16,500 7,000 80,000 10,200 24,500 12,500 5,700 The company also incurred the following indirect costs Salaries Insurance Depreciation office expenses $32,000 7,600 15,200 42,000 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 31,500 A 60 40 13,500 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? VORTEX COMPANY Departmental Contribution Statements Department A Department B Sales $ 819,200 $ 460,800 Cost of goods sold 400,000 299,520 Gross profit 419,200 161,280 Direct expenses Salaries 118,000 80,000 Depreciation 16,500 12,500 Insurance 16,500 10,200 Utilities 20,500 24,500 Maintenance 7,000 5,700 178,500 132,900 Total direct expenses Departmental contributions to overhead Allocated indirect expenses Salaries Office Insurance Depreciation 0 0 Total indirect expenses Operating income (loss) 0 0 DO
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