Renton Co. has two operating (production) departments supported by a number of service departments. The following information was collected for a recent period:
Indirect costs are allocated as follows: salaries on the basis of sales, office expenses on the basis of the number of employees, and all other costs on the basis of square footage. Additional information about the production departments follows:

Sales for the Machining Department are $724,404 and sales for the Assembly Department are $356,796.
Determine the departmental contribution to overhead and the departmental net income for each production department.

Question

Renton Co. has two operating (production) departments supported by a number of service departments. The following information was collected for a recent period:  
Indirect costs are allocated as follows: salaries on the basis of sales, office expenses on the basis of the number of employees, and all other costs on the basis of square footage. Additional information about the production departments follows:

Sales for the Machining Department are $724,404 and sales for the Assembly Department are $356,796.
Determine the departmental contribution to overhead and the departmental net income for each production department.

Quizplus · Accepted Answer

The Answer of Renton Co. has two operating (production) departments supported by a number of service departments. The following information was collected for a recent period:  
Indirect costs are allocated as follows: salaries on the basis of sales, office expenses on the basis of the number of employees, and all other costs on the basis of square footage. Additional information about the production departments follows:

Sales for the Machining Department are $724,404 and sales for the Assembly Department are $356,796.
Determine the departmental contribution to overhead and the departmental net income for each production department.

Renton Co Has Two Operating (Production) Departments Supported by a Number