Fallow Corporation has two separate profit centers. The following information is
ID: 2466428 • Letter: F
Question
Fallow Corporation has two separate profit centers. The following information is available for the most recent year:
The West Division occupies 5,000 square feet in the plant. The East Division occupies 3,000 square feet. Rent, which was $40,000 for the year, is an indirect expense and is allocated based on square footage. Compute operating income for the West Division.
$120,000.
$95,000.
$94,000.
$69,000.
$54,000.
West Division East Division Sales (net) $200,000 $350,000 Salary expense 26,000 40,000 Cost of goods sold 80,000 175,000Explanation / Answer
operating income for the West Division.=200,000-26,000-80,000-Rent 40,000/8000*5000=$69,000.
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