Jamesway Corporation has two separate divisions that operate as profit centers.

Question

Jamesway Corporation has two separate divisions that operate as profit centers. The following information is available for the most recent year. White Division; Grey Division Sales (net) $200,000; $400,000 Salary Expense $28,000; $48,000 Cost of Goods Sold $100,000; $159,000 The White Division occupies 20,000 square feet in the plant. The Grey Division occupies 30,000 square feet. Rent is an indirect expense and is allocated based on square footage. Rent expense for the year was $50,000. Compute departmental income for the White and Grey Divisions, respectively. a. $52,000; $163,000. b. $172,000; $352,000. c. $72,000; $163,000. d. $72,000; $193,000. e. $100,000; $241,000.

Explanation / Answer

Income for white is 200,000 - 28,000 - 100,000 - 20,000(rent) = $52,000,

Income for grey division is 400,000 - 48,000 - 159,000 - 30,000 = $163,000,

hence a) $52,000; $163,000

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