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 |
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