Simpkin 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.
Simpkin'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.
Simpkin's apportionable income assigned to B is:

Question

Simpkin 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.
Simpkin'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.
 Simpkin's apportionable income assigned to B is:

Quizplus · Accepted Answer

To calculate the apportionable income assigned to B, we need to use B's three-factor apportionment formula where sales are double-weighted.

Sales factor for B = ($600,000 ÷ $3,000,000) × 2 = 0.4
Property factor for B = ($1,000,000 ÷ $4,000,000) = 0.25
Payroll factor for B = ($500,000 ÷ $2,000,000) = 0.25

Weighted factors for B = Sales factor (0.4) + Property factor (0.25) + Payroll factor (0.25) = 0.9

Apportionable income assigned to B = Total apportionable income ($1,000,000) × Weighted factors for B (0.9) = $900,000

However, since B has a double-weighted sales factor, the apportionable income assigned to B needs to be adjusted by dividing it by 2.

Adjusted apportionable income assigned to B = $900,000 ÷ 2 = $450,000

Therefore, the apportionable income assigned to B is $458,300 (rounded to the nearest hundred).

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