Helene Corporation owns manufacturing facilities in States A, B, andC. 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, andC. 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

To calculate the apportionable income assigned to each state, we need to apply the apportionment formula for each state.

For State A: 
Sales factor = $500,000 / $1,500,000 = 1/3 
Payroll factor = $300,000 / $900,000 = 1/3 
Property factor = $200,000 / $600,000 = 1/3

Weighted factor = (1/3 + 1/3 + 1/3) / 3 = 1/3 
Apportionable income assigned to State A = 1/3 * $1,000,000 = $333,333

For State B: 
Sales factor = $400,000 * 2 / $1,500,000 = 8/15 
Payroll factor = $300,000 / $900,000 = 1/3 
Property factor = $200,000 / $600,000 = 1/3

Weighted factor = (8/15 + 1/3 + 1/3) / 3 = 17/45 
Apportionable income assigned to State B = 17/45 * $1,000,000 = $377,778

For State C: 
Sales factor = $600,000 / $1,500,000 = 2/5

Apportionable income assigned to State C = 2/5 * $1,000,000 = $400,000

Therefore, the total apportionable income assigned to the three states is $1,111,111. To make sure that the total apportionment equals the total apportionable income, we need to normalize the results as follows:

Normalized apportionable income for State A = $333,333 / $1,111,111 * $1,000,000 = $300,030 
Normalized apportionable income for State B = $377,778 / $1,111,111 * $1,000,000 = $339,988 
Normalized apportionable income for State C = $400,000 / $1,111,111 * $1,000,000 = $360,982

Therefore, the apportionable income assigned to State A is $300,030, which is closest to choice C ($322,200).

Helene Corporation Owns Manufacturing Facilities in States A, B, AndC