Vortex Company operates a retail store with two departments. Information about t

ID: 2438600 • Letter: V

Question

Vortex Company operates a retail store with two departments. Information about those departments follows.

The company also incurred the following indirect costs.

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.

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.)

Department A Department B Sales $ 812,800 $ 457,200 Cost of goods sold 470,000 297,180 Direct expenses Salaries 115,000 86,000 Insurance 19,500 10,200 Utilities 21,000 27,000 Depreciation 19,000 12,500 Maintenance 6,700 5,500 Problem 24.4A Departmental contrlbutlon to Income LO P3 Vortex Company operates a retall store with two departments. Information about those departments follows. Sales Cost of goods sold Direct expenses $812,800 478,888 $457, 286 297,188 Salaries Insuranice Utilities Depreciation 115,808 19,500 21,888 19,808 6,788 86,868 18,286 27 , ??? 12,588 5,580 The company also Incurred the following Indlrect costs. Salaries Insur ance Depreciation Office expenses $35,800 7,888 14,288 49,888 Indlrect costs are allocated as follows: salarles on the basis of sales; Insurance and depreclation on the basis of equare footage; and office expenses on the basis of number of employees. Additional Information about the departments follows 34, 380 14,7e0 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.) t A t B 3 812800 457,200

Explanation / Answer

Vertex Company Departmental Contribution Statement Department A Department B a Sales $ 8,12,800 $ 4,57,200 b Cost of goods sold $ 4,70,000 $ 2,97,180 c Gross Profit (a - b) $ 3,42,800 $ 1,60,020 Direct expenses Salaries $ 1,15,000 $ 86,000 Insurance $ 19,500 $ 10,200 Utilities $ 21,000 $ 27,000 Depreciation $ 19,000 $ 12,500 Maintenance $ 6,700 $ 5,500 d Total Direct expenses $ 1,81,200 $ 1,41,200 Departmental Contribution to overhead (c - d) $ 1,61,600 $ 18,820 Allocated Indirect expenses Salaries $ 22,400 $ 12,600 Insurance $ 5,460 $ 2,340 Depreciation $ 9,940 $ 4,260 Office $ 29,400 $ 19,600 e Total Indirect expenses $ 67,200 $ 38,800 Opreating Income (loss) (d - e) $ 94,400 $ -19,980 Workings: Calculation of allocation of Indirect expenses: Salaries allocation Sales workings Allocated expense Department A $ 8,12,800 ($8,12,800/$12,70,000) X $35,000 $ 22,400 Department B $ 4,57,200 ($4,57,200/$12,70,000) X $35,000 $ 12,600 Total $ 12,70,000 $ 35,000 Insurance allocation Sq. Ft. workings Allocated expense Department A 34,300 (34,300/49,000) X $7,800 $ 5,460 Department B 14,700 (14,700/49,000) X $7,800 $ 2,340 49,000 $ 7,800 Depreciation allocation Sq. Ft. workings Allocated expense Department A 34,300 (34,300/49,000) X $14,200 $ 9,940 Department B 14,700 (14,700/49,000) X $14,200 $ 4,260 49,000 $ 14,200 Office allocation Employees workings Allocated expense Department A 66 (66/110) X $49,000 $ 29,400 Department B 44 (44/110) X $49,000 $ 19,600 110 $ 49,000

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Vortex Company operates a retail store with two departments. Information about t

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Vortex Company operates a retail store with two departments. Information about t

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