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Vortex Company operates a retail store with two departments. Information about those departments follows. Department A $838,500 470,000 Department B $451,500 293,475 Sales Cost of
Vortex Company operates a retail store with two departments. Information about those departments follows. Department A $838,500 470,000 Department B $451,500 293,475 Sales Cost of goods sold Direct expenses: Salaries Insurance Utilities Depreciation Maintenance 121,000 14,500 21,500 15,000 6,400 84,000 10,300 24,000 13,000 5,300 The company also incurred the following indirect costs. Salaries Insurance Depreciation Office expenses $32,000 7,200 14,000 49,000 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 A Square footage 32,900 14,100 Number of employees 84 36 B 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? Required 1 Required 2 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 Sales $ 838,500 $ 451,500 Cost of goods sold 470,000 293,475 Gross profit 368,500 158,025 Direct expenses Salaries Insurance Utilities 121,000 14,500 21,500 15,000 6,400 84,000 10,300 24,000 13,000 5,300 Depreciation Maintenance 136,600 178,400 190,100 21,425 Total direct expenses Departmental contributions to overhead Allocated indirect expenses Salaries Insurance Depreciation Office Total indirect expenses 0 0 Operating income (loss) $ 190,100 $ 21,425
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