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385,000 165,000 Rent and espemse of executive offices 85,000 Exacutive salaries Sales inl NH 185,000 65,000 4,000 135,000 3,200 30,000 70,000 6,000 42,000 Real estate tax MACRS on building 17,000 3,800 The accountant has determined the best way to allocate common expenses is based on sales ratio Compute income for Federal and Maine, Vermont and NH for 2018 BEST WISHES FOR A JOYOUS HOLIDAY SEASON AND CONTINUED SUCCESS IN YoOUR ACADEMIC AND PERSONAL LIVES
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Sol: Working Notes: (1) Statement showing allocation of common expenses (Based on sales ratio) Ratio (W. N: 2)Marine 800000 Particulars Purchases Vermont 1600000 4000000 * 5) (4000000 2/5) (4000000 2/5) 154000 (385000 * 1/5) (385000 2/5) (385000 2/5) 66000 (165000 * 1/5) (165000 2/5) (165000 2/5) 34000 85000 1/5 850002/5(85000 2/5 1854000 Total 01:02:02 1600000 4000000 Executive salaries 01:02:02 77000 154000 385000 Central buying office Rent and expense of executives offices Total common expenses 01:02:02 33000 66000 165000 01:02:02 17000 34000 85000 927000 1854000 4635000 (2) Calculation of Sales ratio Total Sales in Marine, vermount and NH are 1600000, 3200000 and 3200000 Therefore, sales ratio between them is 1600000 : 3200000 : 3200000 i.e: ratio = 01 : 02: 02.Computation of Income for Federal in Marine, Vermount and NH Particulars Marine NH 3200000 Vermount Total Total Sales 1600000 3200000 Less Total Common expenses (W. N 1) salary ubilities (No calarity from question) Insurance Rent Real estate tax MARCS on bulidin Total Income 927000 4635000 400000 175000 13200 72000 17000 3800 2684000 135000 70000 6000 42000 80000 185000 65000 4000 3200 30000 17000 3800 1071200 519800 1093000 Notes and Assumption: 1. From the question, federal is assumed to be a person and Marine, Vermount and NH are Departments for easy understandings 2. It is assumed to be Rent given in common expenses and rent given in individual departments are Different 3. If we assumed to be same i.e; rent is already been divided to respective Deparments, then Total common expenses will be changed to 912600, 1825200 and 1825200. So, Total Income will be changed to 534200,1100000 and 1121800 4. In point (3), it is calculated in same process by adjusting rents column

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