Vortex Company operates a retail store with two departments. Information about those departments follows. Department ADepartment...
Vortex Company operates a retail store with two departments.
Information about those departments follows.
Department ADepartment B
Sales$838,500 $451,500
Cost of goods sold 440,000 293,475
Direct expenses
Salaries 115,000 83,000
Insurance 19,000 10,700
Utilities 22,000 28,500
Depreciation 15,500 13,500
Maintenance 6,200 5,300
The company also incurred the following indirect costs.
Salaries$31,000
Insurance7,200
Depreciation15,400
Office expenses41,000
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.
DepartmentSquare footageNumber of employees
A 30,800 84
B 13,200 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.)
2. Should Department B be eliminated?
Yes
No
Homework Answers
| Department A | Department B | |
| Sales | $838500 | $451500 |
| Less: Cost of goods sold | (440000) | (293475) |
| Gross profit | 398500 | 158025 |
| Less: Direct expenses | ||
| Salaries | 115000 | 83000 |
| Insurance | 19000 | 10700 |
| Utilities | 22000 | 28500 |
| Depreciation | 15500 | 13500 |
| Maintenance | 6200 | 5300 |
| Total direct expenses | 177700 | 141000 |
| Departmental contribution overhead | 220800 | 17025 |
| Less: Indirect expenses | ||
| Salaries | 20150 | 10850 |
| Insurance | 5040 | 2160 |
| Depreciation | 10780 | 4620 |
| Office expenses | 28700 | 12300 |
| Total indirect expenses | 64670 | 29930 |
| Operating income (loss) | $156130 | $(12905) |
Allocation of indirect costs
Total sales= $838500+451500= $1290000
Salaries
Department A= $31000*838500/1290000= $20150
Department B= $31000*451500/1290000= $10850
Insurance
Total Square footage= 30800+13200= 44000
Department A= $7200*30800/44000= $5040
Department B= $7200*13200/44000= $10850
Depreciation
Department A= $15400*30800/44000= $10780
Department B= $15400*13200/44000= $4620
Office expenses
Total number of employees= 84+36= 120
Department A= $41000*84/120= $28700
Department B= $41000*36/120= $12300
2) No, Department B should not be eliminated because Department B is contributing $17025 toward indirect cost and if Department B is eliminated all the indirect cost will be contributed toward Department A by which operating income of Department A will decrease. So, Department B should not be eliminated.
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Vortex Company operates a retail store with two departments.
Information about those departments follows.
Department ADepartment...
Vortex Company operates a retail store with two departments. Information about those departments follows. Department A...
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
440,000
293,475
Direct expenses:
Salaries
123,000
86,000
Insurance
16,000
11,000
Utilities
21,000
29,500
Depreciation
16,000
13,000
Maintenance
6,400
5,800
The company also incurred the following indirect costs.
Salaries
$26,000
Insurance
6,600
Depreciation
14,600
Office expenses
40,000
Indirect costs are allocated as follows: salaries on the basis of
sales; insurance and depreciation on the...
Vortex Company operates a retail store with two departments. Information about those departments follows. Department A...
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Vortex Company operates a retail store with two departments. Information about those departments follows. Department A...
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Vortex Company operates a retail store with two departments.
Information about those departments follows.
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Vortex Company operates a retail store with two departments. Information about those departments follows. Department A...
Vortex Company operates a retail store with two departments.
Information about those departments follows.
Department A
Department B
Sales
$
825,500
$
444,500
Cost of goods sold
465,000
288,925
Direct expenses
Salaries
124,000
85,000
Insurance
15,000
10,400
Utilities
24,000
24,000
Depreciation
19,000
13,000
Maintenance
6,300
5,700
The company also incurred the following indirect costs.
Salaries
$33,000
Insurance
7,000
Depreciation
14,400
Office expenses
48,000
Indirect costs are allocated as follows: salaries on the basis of
sales; insurance and depreciation on the...
22 Vortex Company operates a retail store with two departments. Information about those departments follows. DepartmentA...
22
Vortex Company operates a retail store with two departments. Information about those departments follows. DepartmentA $806,400 470,000 Department B $453,600 294,840 Sales Cost of goods sold Direct expenses Salaries 122,000 19,500 22,000 19,500 88,000 10,200 25,500 Insurance Utilities Depreciation Maintenance 13,000 5,300 6,600 The company also incurred the following indirect costs. Salaries $35,000 6,600 15,400 43,000 Insurance Depreciation Office expenses Indirect costs are allocated as follows: salaries on the basis of sales; insurance and depreciation on the basis of...
Vortex Company operates a retail store with two departments. Information about those departments follows. Department A...
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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
440,000
293,475
Direct expenses:
Salaries
123,000
86,000
Insurance
16,000
11,000
Utilities
21,000
29,500
Depreciation
16,000
13,000
Maintenance
6,400
5,800
The company also incurred the following indirect costs.
Salaries
$26,000
Insurance
6,600
Depreciation
14,600
Office expenses
40,000
Indirect costs are allocated as follows: salaries on the basis of
sales; insurance and depreciation on the...
Vortex Company operates a retail store with two departments. Information about those departments follows. Department A $845,000 470,000 Department B $455,000 295, 750 Sales Cost of goods sold Direct expenses Salaries Insurance Utilities Depreciation Maintenance 117,000 10,000 22,500 19,500 7,000 87,000 10,500 25,000 14,000 5,300 The company also incurred the following indirect costs. Salaries Insurance Depreciation Office expenses $35,000 8,000 14,200 40,000 Indirect costs are allocated as follows: salaries on the basis of sales; insurance and depreciation on the basis...
Vortex Company operates a retail store with two departments. Information about those departments follows. Department A $825,500 420,eee Department 8 $444,500 2 88,925 Sales Cost of goods sold Direct expenses Salaries Insurance Utilities Depreciation Maintenance 119,000 11,000 23,500 16,500 6.409 85.000 10,500 27.500 12.500 s. 100 The company also incurred the following indirect costs Salaries Insurance Depreciation Office expenses $27,000 7.600 14,200 49,000 Indirect costs are allocated as follows: salaries on the basis of sales insurance and depreciation on the...
Vortex Company operates a retail store with two departments.
Information about those departments follows.
Vortex Company operates a retail store with two departments. Information about those departments follows. Department A $ 800,000 475,000 Department B $450,000 292,500 Sales Cost of goods sold Direct expenses Salaries Insurance Utilities Depreciation Maintenance 117,000 12,000 24,500 15,500 6,500 85,000 10,200 27,500 13,500 5,000 The company also incurred the following indirect costs. Salaries Insurance Depreciation Office expenses $33,000 7,200 15,800 44,000 Indirect costs are allocated...
Vortex Company operates a retail store with two departments.
Information about those departments follows.
Department A
Department B
Sales
$
825,500
$
444,500
Cost of goods sold
465,000
288,925
Direct expenses
Salaries
124,000
85,000
Insurance
15,000
10,400
Utilities
24,000
24,000
Depreciation
19,000
13,000
Maintenance
6,300
5,700
The company also incurred the following indirect costs.
Salaries
$33,000
Insurance
7,000
Depreciation
14,400
Office expenses
48,000
Indirect costs are allocated as follows: salaries on the basis of
sales; insurance and depreciation on the...
22
Vortex Company operates a retail store with two departments. Information about those departments follows. DepartmentA $806,400 470,000 Department B $453,600 294,840 Sales Cost of goods sold Direct expenses Salaries 122,000 19,500 22,000 19,500 88,000 10,200 25,500 Insurance Utilities Depreciation Maintenance 13,000 5,300 6,600 The company also incurred the following indirect costs. Salaries $35,000 6,600 15,400 43,000 Insurance Depreciation Office expenses Indirect costs are allocated as follows: salaries on the basis of sales; insurance and depreciation on the basis of...
Vortex Company operates a retail store with two departments. Information about those departments follows. Department A $825, 500 475, 000 Department B $444, 500 288, 925 Sales Cost of goods sold Direct expenses Salaries 115, 000 19, 500 20, 500 20,500 6, 500 87, 000 10, 300 24, 500 12, 500 5, 800 Insurance Utilities Depreciation Maintenance The company also incurred the following indirect costs. Salaries $32,000 6,800 14, 800 49,000 Insurance Depreciation office expenses Indirect costs are allocated as...
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Williams Company began operations in January 2019 with two operating (selling) departments and one service (office) department. Its departmental income statements follow. WILLIAMS COMPANY Departmental Income Statements For Year Ended December 31, 2019 Clock Mirror Combined Sales $ 200,000 $115,000 $ 315,000 Cost of goods sold 98,000 71,300 169,300 Gross profit 102,000 43,700 145,700 Direct expenses Sales salaries 21,000 7,500 28,500 Advertising 1,600 700 2,300 Store supplies used 650 350 1,000 Depreciation-Equipment 1,900 2,100 Total direct expenses 25, 1508,750 33,900...
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