Question

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			$	420,000
Salary expense			30,000				50,000
Cost of goods sold			120,000				161,000

The Black Division occupies 18,000 square feet in the plant. The Navy Division occupies 27,000 square feet. Rent is an indirect expense and is allocated based on square footage. Rent expense for the year was $45,000. Compute departmental income for the Black and Navy Divisions, respectively. (Do not round your intermediate computations)

Multiple Choice

$280,000; $259,000.

$90,000; $177,000.

$370,000; $370,000.

$232,000; $182,000.

$90,000; $209,000.

Answer 1

	Ans: $232,000; $182,000.
	Solution
			Computation Of Departmental Income
					Black Division				Navy Division
1		Sales (net)		$	4,00,000			$	4,20,000
2	Less:	Salary expense			-30,000				-50,000
3	Less:	Cost of goods sold			-1,20,000				-1,61,000
4	Less:	Indirect Expenses Rent			-18,000				-27000
		Deparmental Income(1-2-3-4)			2,32,000				1,82,000
Note: Indirect expenses should be apportioned in floor area Occupied by each department/Division