Nesbit Co. has two operating (production) departments supported by a number of service departments. The following information was collected for a recent period: ?  Direct Costs  ??MachiningDepartmentAssemblyDepartmentIndirect CostSalaries$122,400$ 85,700$36,700Insurance  20,20011,0005,500Utilities  23,90013,9002,000Depreciation  20,70011,50013,800Maintenance  7,0004,70029,400Office expenses  -0--0-71,100Cost 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:SquareNumber

ofFootageEmployees Machining14,53578Assembly4,84552Sales 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.

What will be an ideal response?


?Machining
Department
?Assembly
Department
Sales.........................................................$724,404?$356,796
Cost of goods sold.................................... 327,600?121,200
Gross profit.............................................. $396,804?$235,596
Direct expenses:???
Salaries..............................................$122,400?$ 85,700
Insurance........................................... 20,200?11,000
Utilities..............................................23,900?13,900
Depreciation...................................... 20,700?11,500
Maintenance......................................7,000?4,700
Total direct expenses......................... $194,200?$126,800
Departmental contribution$202,604?$108,796
to overhead.......................................???
Indirect expense allocations:???
Salaries (67% and 33%).................. $ 24,589?$ 12,111
Insurance (75% and 25%)................. 4,125?1,375
Utilities (75% and 25%).................... 1,500?500
Depreciation (75% and 25%)........... 10,350?3,450
Maintenance (75% and 25%)........... 22,050?7,350
Office expenses (60% and 40%)...... 42,660?28,440
Total indirect expenses.....................  $105,274?$ 53,226
Net income............................................ $ 97,330?$ 55,570

Business

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