Question

Jansen Company reports the following for its ski department for the year 2019. All of its costs are direct, except as noted.

Sales	$	615,000
Cost of goods sold		445,000
Salaries		111,000	($25,200 is indirect)
Utilities		14,200	($5,800 is indirect)
Depreciation		45,800	($17,800 is indirect)
Office expenses		23,000	(all indirect)

1. Prepare a departmental income statement for 2019.
2. & 3. Prepare a departmental contribution to overhead report for 2019. Based on these two performance reports, should Jansen eliminate the ski department?

Prepare a departmental income statement for 2019.

	JANSEN COMPANY Departmental Income Statement—Ski Department For Year Ended December 31, 2019 Ski Dept Operating expenses

Prepare a departmental contribution to overhead report for 2019. Based on these two performance reports, should Jansen eliminate the ski department?

	JANSEN COMPANY Departmental Contribution to Overhead—Ski Department For Year Ended December 31, 2019 Ski Dept Contribution to overhead Should Jansen eliminate the ski department?

Answer 1

1
Jansen Company
Ski Department
Departmental Income Statement
For the year 2019
	$	$
Sales		$     6,15,000.00
Cost of Goods Sold		$     4,45,000.00
Gross Profit		$     1,70,000.00
Operating Expenses
Salaries	$   1,11,000.00
Utilities	$      14,200.00
Depreciation	$      45,800.00
Office Expenses	$      23,000.00	$     1,94,000.00
Operating Income ( Loss )		$       -24,000.00
2 & 3.
Jansen Company
Ski Department
Contribution Margin Income Statement
For the year 2019
	$	$
Sales		$     6,15,000.00
Variable Expenses :
Cost of Goods Sold	$   4,45,000.00
Salaries (111000-25200)	$      85,800.00
Utilities (14200-5800)	$        8,400.00
Depreciation (45800-17800)	$      28,000.00	$     5,67,200.00
Contribution to Overhead		$        47,800.00

No, Jansen should not eliminate the Ski Department