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) $ 600,000 $ 330,000 Salary expense 21,000 41,000 Cost of goods sold 160,000 152,000 The Black Division occupies 26,000 square feet in the plant. The Navy Division occupies 39,000 square feet. Rent is an indirect expense and is allocated based on square footage. Rent expense for the year was $65,000. Compute departmental income for the Black and Navy Divisions, respectively. (Do not round your intermediate computations)

Answer 1

Answer and Explanation:

The computation of the departmental income for the black and navy decisions is shown below:

Particulars               Black Division                Navy Division

Net sales                $600,000                      $330,000

Less:

Salary expense       -$21,000                       -$41,000

Cost of goods sold  -$160,000                    -$152,000

Rent expense             -$26,000                   -$39,000

Departmental income $393,000                  $98,000

We simply deduct all expenses from the sales so that the departmental income could come