Question
Vortex Company operates a retail store with two departments. Information about those departments follows. Department A Department B Sales $ 838,500 $ 451,500 Cost of
Vortex Company operates a retail store with two departments. Information about those departments follows. Department A Department B Sales $ 838,500 $ 451,500 Cost of goods sold 455,000 293,475 Direct expenses: Salaries 124,000 82,000 Insurance 19,000 10,900 Utilities 21,500 24,500 Depreciation 15,000 13,000 Maintenance 6,700 5,300 The company also incurred the following indirect costs. Salaries $28,000 Insurance 6,400 Depreciation 14,400 Office expenses 43,000 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 72 B 13,800 48 Required: 1. Determine the departmental contribution to overhead and the departmental net income for department A and Department B.
Sales Department B $ 451,500 293,475 158,025 2932 00 VORTEX COMPANY Departmental Contribution Statements Department A $ 838,500 Cost of goods sold 455,000 Gross profit 383,500 Direct expenses Salaries 124,000 Insurance 19,000 Utilities 21,500 Depreciation 15,000 Maintenance 6,700 82,000 10,900 24,500 13,000 5,300 186,200 197,300 135,700 22,325 Total direct expenses Departmental contributions to overhead Allocated indirect expenses Salaries I Insurance Depreciation Office I Total indirect expenses Operating income (loss) $ 197,300 $ 22,325Step by Step Solution
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