Carolina's Hats has the following sales, payroll, and property factors: What is Carolina's Hats North and South Carolina apportionment factors if North Carolina uses an equally weighted three-factor formula and South Carolina uses a double-weighted sales factor formula? (Round your answers to two decimal places.)
A)North Carolina 74.03 percent, and South Carolina 19.45 percent.
B)North Carolina 74.03 percent, and South Carolina 20.22 percent.
C)North Carolina 74.28 percent, and South Carolina 19.45 percent.
D)North Carolina 74.28 percent, and South Carolina 22.51 percent.

Question

Carolina's Hats has the following sales, payroll, and property factors:  What is Carolina's Hats North and South Carolina apportionment factors if North Carolina uses an equally weighted three-factor formula and South Carolina uses a double-weighted sales factor formula? (Round your answers to two decimal places.)
A)North Carolina 74.03 percent, and South Carolina 19.45 percent. 
B)North Carolina 74.03 percent, and South Carolina 20.22 percent. 
C)North Carolina 74.28 percent, and South Carolina 19.45 percent. 
D)North Carolina 74.28 percent, and South Carolina 22.51 percent.

Quizplus · Accepted Answer

To calculate the apportionment factors using an equally weighted three-factor formula, we add up the sales, payroll, and property factors for each state and divide by the total for both states:

North Carolina: (3,500,000 + 700,000 + 35,000) / (3,500,000 + 700,000 + 35,000 + 500,000 + 100,000 + 5,000) = 0.7403 or 74.03%

South Carolina: (1,500,000 + 300,000 + 15,000) / (1,500,000 + 300,000 + 15,000 + 500,000 + 100,000 + 5,000) = 0.1945 or 19.45%

To calculate the apportionment factors using a double-weighted sales factor formula, we divide each state's sales factor by the total sales factor for both states and then double South Carolina's result:

North Carolina: 3,500,000 / (3,500,000 + 1,500,000) = 0.7 or 70%
South Carolina: 1,500,000 / (3,500,000 + 1,500,000) = 0.3 or 30%
South Carolina (double-weighted): 0.3 x 2 = 0.6 or 60%

Finally, we add the two apportionment factors for South Carolina:

South Carolina: 19.45% + 60% = 79.45%

The closest answer choice is B: North Carolina 74.03 percent, and South Carolina 20.22 percent.

Carolina's Hats Has the Following Sales, Payroll, and Property Factors