Mach Co. operates three manufacturing departments as profit centers. The followi

Question

Mach Co. operates three manufacturing departments as profit centers. The following information is available for its most recent year: Dept. Sales Cost of goods sold Direct expenses Indirect expenses 1 $1,700,000 $945,000 $170,000 $115,000 2 680,000 202,500 41,400 135,000 3 1,190,000 405,000 202,500 27,000 Department 1's contribution to overhead as a percent of sales is:

19.7%

27.6%

6.8%

44.4%

34.4%

What cost amount should be allocated to Product A for this period's $1,500 of joint costs on the basis of market value at the point of separation?

$900

$950

$570

$550

$700

Jamesway Corporation has two separate divisions that operate as profit centers. The following information is available for the most recent year:

The White Division occupies 10,000 square feet in the plant. The Grey Division occupies 40,000 square feet. Rent is an indirect expense and is allocated based on square footage. Rent expense for the year was $50,000.

rev: 04_15_2014_QC_48391

$26,000

$61,000

$91,000

$125,000

$85,000

Explanation / Answer

1)

Department 1's contribution to overhead as a percent of sales = (Sale-Cost of Good Sold - Direct Expenses)/Sales

Department 1's contribution to overhead as a percent of sales = (1700000-945000-170000)/1700000

Department 1's contribution to overhead as a percent of sales = 34.4%

Answer

34.4%

2)

Joint Cost Allocated to Product A = 1500 * (300*7)/(300*7+200*12)

Joint Cost Allocated to Product A = $ 700

Answer

$700

3)

Grey Division's departmental income = Sales (net) - Cost of goods sold - Salary expense - Allocated Rent Expenses

Grey Division's departmental income = 200000-75000 - 24000-50000*40000/(40000+10000)

Grey Division's departmental income = 61000

Answer

$61,000

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