NewCo. has two operating (production) departments supported by a number of service departments. The following information was collected for a recent period:

Direct Costs by Dept. Indirect Costs to be allocated

Machinery Dept Assembly Dept between both Depts

Salaries $122,400 $85,700 $36,700

Insurance 20,200 11,000 5,500

Utilities 23,900 13,900 2,000

Depreciation 20,700 11,500 13,800

Maintenance 7,000 4,700 29,400

Office expenses -0- -0- 71,100

Cost of goods sold 327,600 121,200

Indirect costs are allocated as follows: salaries on the basis of sales, office expenses on the basis of the number of employees, and all other costs (insurance, utilities, depreciation and maintenance) on the basis of square footage. Additional information about the production departments follows:

Square Footage Number of Employees

Machining 14,535 78

Assembly 4,845 52

Sales for the Machining Department are $724,404 and sales for the Assembly Department are $356,796. Determine the departmental net income for each production department. Use the template below. Show your work for indirect expenses for credit. (8 points). Check: Gross profit for Machinery Dept should be $396,804. Net income for Machinery Dept should be a number between $96,000 and $98,000. Net income for Assembly Dept should be a number greater than $55,000.

Response to P7.

Machinery Dept. Assembly Dept.

Sales

Cost of goods sold

Gross profit

Direct expenses:

Salaries

Insurance

Utilities

Depreciation

Maintenance

Total direct expenses

Indirect expense allocations:

Salaries

Insurance

Utilities

Depreciation

Maintenance

Office expenses

Total indirect expenses

Net income