Question

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 $819,e00 450,000 Department B $441,boe 286,650 Sales Cost of goods sold Direct expenses Salaries 121,000 87,000 10,100 27,000 13,000 5,100 Insurance Utilities 19,500 21,500 16,500 6,800 Depreciation Maintenance The company also incurred the following indirect costs. Salaries $32,000 6,400 15,800 44,000 Insurance Depreciation office expenses 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. Number of employees Square footage 31,500 13,500 Department 77 33 Required: 1. Determine the departmental contribution to overhead and the departmental net income for department A and Department B. (Do not round intermediete calculetions. Round your final answers to nearest whole dollar.) VORTEX COMPANY Departmental Contribution Statements Department A Department B

Answer 1

Requirement: 1 VORTEX COMPANY Departmental Contribution Statements Department A Department B Sales 819000 441000 Less: Cost of goods sold 450000 286650 Gross profit 369000 154350 Direct Expenses: Salaries 121000 870001 Insurance 19500 101001 Utilities 21500 27000 Depreciation 16500 13000 Maintenance 6800 5100 Total direct expenses 185300 142200 Department contribution to over head 183700 12150 Allocated indirect expenses Salaries (65% and 35%) * 32000 20800 11200 Insurance (70% and 30%) * 6400 4480 1920 Depreciation (70% and 30%) * 15800 11060 4740 Office expenses (70% and 30%) * 44000 30800 13200 Total indirect expenses 67140 310601 Department Net Income (loss) 116560 -18910 Requirement: 2 NO