Question : 168.Nesbit Co. has two operating (production) departments supported by a : 1258708

 

168.Nesbit Co. has two operating (production) departments supported by a number of service departments. The following information was collected for a recent period: 

Direct CostsIndirect Cost

Machining DepartmentAssembly Department

Salaries$122,400$85,700$36,700

Insurance   20,20011,0005,500

Utilities   23,90013,9002,000

Depreciation   20,70011,50013,800

Maintenance     7,0004,70029,400

Office expenses            -0-              -0-              71,100

Cost of goods sold 327,600121,200

Indirect costs are allocated as follows: salaries on the basis of sales, office expenses on the basis of the number of employees, and all other costs on the basis of square footage. Additional information about the production departments follows: 

Square FootageNumber of Employees

Machining14,53578

Assembly4,84552

Sales for the Machining Department are $724,404 and sales for the Assembly Department are $356,796. Determine the departmental contribution to overhead and the departmental net income for each production department.    

 

169.Holliday, Inc., operates a retail store with two departments, A and B. Its departmental income statement for the current year follows: 

Holliday, Inc.Departmental Income StatementFor Year Ended December 31

Dept. ADept. BCombined

Sales$180,000$200,000$380,000

Direct expenses 129,900 142,870   272,770

Contributions to overhead $50,100 $57,130 $107,230

Indirect expenses:

Depreciation-Building10,00011,76021,760

Maintenance1,6001,7003,300

Utilities6,2006,32012,520

Office expenses            1,800                     2,000                       3,800

Total indirect expenses     $19,600   $21,780                 $41,380

Net income    $30,500   $35,350   $65,850

Holliday allocates building depreciation, maintenance, and utilities on the basis of square footage. Office expenses are allocated on the basis of sales. Management is considering an expansion to a three-department operation. The proposed Department C would generate $120,000 in additional sales and have a 17.5% contribution to overhead. The company owns its building. Opening Department C would redistribute the square footage to each department as follows: A, 19,040; B, 21,760 sq. ft.; C, 13,600. Increases in indirect expenses would include: maintenance, $500; utilities, $3,800; and office expenses, $1,200. Complete the following departmental income statements, showing projected results of operations for the three sales departments. (Round amounts to the nearest whole dollar.) 

170.Williams Co. operates three separate departments (R, S, T). The data below is provided for the current year: 

Total Sales$120,000 ($40,000 from each department)

Cost of Goods Sold$80,000 (50% from R; 25% from S; 25% from T)

Direct Expense$26,000 ($6,000 from R; $12,000 from S; $8,000 from T)

Indirect Expenses$9,000

Required: Prepare an income statement showing the departmental contributions to overhead for the current year.   171.The following data is available for the Janitorial Services Department of Glitterol Co. 

Revenues$216,000

Cost of Sales168,000

Expenses:

Supplies-Direct12,000

Salaries-Indirect Allocated34,000

Rent-Direct8,000

Rent-Indirect Allocated4,500

Required: Calculate departmental contribution to overhead for the Janitorial Services Department, including the department’s contribution as a percentage of revenues.    

 

 

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