Question

In: Accounting

Marian Corporation has two separate divisions that operate as profit centers. The following information is available...

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

Black Division Navy Division
Sales (net) $ 400,000 $ 350,000
Salary expense 23,000 43,000
Cost of goods sold 140,000 154,000

The Black Division occupies 22,000 square feet in the plant. The Navy Division occupies 33,000 square feet. Rent is an indirect expense and is allocated based on square footage. Rent expense for the year was $55,000. Compute departmental income for the Black and Navy Divisions, respectively. (Do not round your intermediate computations)

Multiple Choice

  • $215,000; $120,000.

  • $377,000; $307,000.

  • $117,000; $128,000.

  • $117,000; $153,000.

  • $260,000; $196,000.

Solutions

Expert Solution

Correct Option A i.e. $215,000; $120,000.
Black Division Navy Division
Sales (net)        400,000        350,000
Less: Salary expense           23,000           43,000
Less: Cost of goods sold        140,000        154,000
Less: Rent Expense           22,000           33,000
(22000/55000 sq feet * 22000 sq feet) (33000/55000 sq feet * 33000 sq feet)
Departmental Income                215,000                120,000

ekkarill92 answered 2 years ago
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