Problem 22-4A Departmental contribution to income LO P3

Vortex Company operates a retail store with two departments. Information about those departments follows.

	Department A			Department B
Sales	$	819,000		$	441,000
Cost of goods sold		440,000			286,650
Direct expenses
Salaries		116,000			85,000
Insurance		16,000			10,600
Utilities		22,000			29,500
Depreciation		15,500			13,500
Maintenance		7,000			5,000

The company also incurred the following indirect costs.

Salaries	$35,000
Insurance	7,000
Depreciation	15,200
Office expenses	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		32,200			84
B		13,800			36

Required: 1. Determine the departmental contribution to overhead and the departmental net income for department A and Department B. (Do not round intermediate calculations. Round your final answers to nearest whole dollar.)

Required: 1. Determine the departmental contribution to overhead and the departmental net income for department A and Department B. (Do not round intermediate calculations. Round your final answers to nearest whole dollar.) VORTEX COMPANY Departmental Contribution Statements Department A Department B 0 0 Direct expenses Total direct expenses 0 0 Allocated indirect expenses 0 Total indirect expenses Operating income (loss) $ 0 $ 0 2. Should Department B be eliminated? O Yes