Helene Corporation owns manufacturing facilities in States A,B,and C.A uses a three-factor apportionment formula under which the sales,property and payroll factors are equally weighted.B uses a three-factor apportionment formula under which sales are double-weighted.C employs a single-factor apportionment factor,based solely on sales.
Helene's operations generated $1,000,000 of apportionable income,and its sales and payroll activity and average property owned in each of the three states is as follows.
Helene's apportionable income assigned to A is:

Question

Helene Corporation owns manufacturing facilities in States A,B,and C.A uses a three-factor apportionment formula under which the sales,property and payroll factors are equally weighted.B uses a three-factor apportionment formula under which sales are double-weighted.C employs a single-factor apportionment factor,based solely on sales.
Helene's operations generated $1,000,000 of apportionable income,and its sales and payroll activity and average property owned in each of the three states is as follows.
 Helene's apportionable income assigned to A is:

Quizplus · Accepted Answer

State A uses a three-factor apportionment formula where each factor, sales, property, and payroll, is equally weighted (1/3). Therefore, Helene's apportionable income assigned to State A is:

Sales factor: $500,000 / ($500,000 + $300,000 + $200,000) = 0.5
Property factor: $200,000 / ($500,000 + $300,000 + $200,000) = 0.2
Payroll factor: $150,000 / ($500,000 + $300,000 + $200,000) = 0.15

Weighted factor: (0.5 + 0.2 + 0.15) / 3 = 0.2833

Apportioned income to State A: $1,000,000 x 0.2833 = $283,300

State B uses a three-factor apportionment formula where sales are double-weighted (2/3) and property and payroll factors are equally weighted (1/3). Therefore, Helene's apportionable income assigned to State B is:

Sales factor: $500,000 x 2 / (($500,000 x 2) + $300,000 + $200,000) = 0.625
Property factor: $200,000 / (($500,000 x 2) + $300,000 + $200,000) = 0.0571
Payroll factor: $150,000 / (($500,000 x 2) + $300,000 + $200,000) = 0.0429

Weighted factor: (0.625 x 2) + 0.0571 + 0.0429) / 3 = 0.4333

Apportioned income to State B: $1,000,000 x 0.4333 = $433,300

State C uses a single-factor apportionment formula based solely on sales. Therefore, Helene's apportionable income assigned to State C is:

Apportioned income to State C: $1,000,000 x ($700,000 / ($500,000 + $200,000)) = $300,000

Adding up the apportioned income for each state:

State A: $283,300
State B: $433,300
State C: $300,000

The total apportioned income is $1,016,600, which is greater than the actual apportionable income of $1,000,000. To correct for this, each state's apportioned income must be scaled down by dividing it by the total apportioned income and multiplying it by the actual apportionable income of $1,000,000.

Scaled apportioned income for State A: $283,300 / $1,016,600 x $1,000,000 = $279,082
Scaled apportioned income for State B: $433,300 / $1,016,600 x $1,000,000 = $426,853
Scaled apportioned income for State C: $300,000 / $1,016,600 x $1,000,000 = $294,065

Therefore, Helene's apportionable income assigned to State A is $279,082. The answer choice closest to this value is C) $322,200.

Helene Corporation Owns Manufacturing Facilities in States A,B,and C