SALES GROSS PROFIT DEPARTMENT A DEPARTMENT B TOTAL $559,500 $440,500 $1,000,000 $100,500 $101,000 $201,500 Indirect costs...

Question

Question

SALES GROSS PROFIT DEPARTMENT A DEPARTMENT B TOTAL $559,500 $440,500 $1,000,000 $100,500 $101,000 $201,500 Indirect costs inc

Answer 1

Answer #1

Solution:

Property tax allocated to department B = $24,000 * 40,000 / 100,000 = $9,600

Marketing expense allocated to department B = Marketing expense * Sales of department B / Total sales

= $50,000 * $440,500 / $1,000,000 = $50,000*44% = $22,000

Net income for department B= Gross profit - Property taxes - Marketing expenses = $101,000 - $9,600 - $22,000 = $69,400

Hence option b is correct.

Answer 2

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