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 under which the sales, property and payroll factors are equally weighted. Since Helene Corporation's sales in State A are zero, the sales factor for State A is zero. This means that all of Helene's apportionable income will be allocated to States B and C.

State B uses a three-factor apportionment formula under which sales are double-weighted. Since Helene's sales in all three states are the same, one-third of the sales will be allocated to State B. Additionally, since sales are double-weighted in this state, two-thirds of the apportionable income will be allocated to State B.

State C employs a single-factor apportionment factor, based solely on sales. Since Helene's sales in State C are one-third of the total sales, one-third of the apportionable income will be allocated to State C.

Therefore, the apportionable income assigned to State A is zero, while the apportionable income assigned to State B is (2/3 x $1,000,000) x (1/3) = $222,222. The apportionable income assigned to State C is (1/3 x $1,000,000) = $333,333. Adding up the total apportionable income assigned to each state yields $0 + $222,222 + $333,333 = $555,555.

The percentage of apportionable income assigned to State A is 0%, while the percentage of apportionable income assigned to State B is (222,222/555,555) x 100% = 40%. The percentage of apportionable income assigned to State C is (333,333/555,555) x 100% = 60%.

Therefore, Choice C ($311,100) is the best answer because it is closest to the percentage of apportionable income allocated to State A (0%).

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