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  3. vortex company operates a retail store with two de

Vortex Company operates a retail store with two departments. Information about those departments follows. Department...

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Accounting

Vortex Company operates a retail store with two departments. Information about those departments follows. Department A Department B Sales $ 819,000 $ 441,000 Cost of goods sold 435,000 286,650 Direct expenses Salaries 121,000 83,000 Insurance 11,500 10,000 Utilities 22,000 25,000 Depreciation 20,000 13,500 Maintenance 7,000 5,200 The company also incurred the following indirect costs. Salaries $32,000 Insurance 7,000 Depreciation 15,800 Office expenses 43,000 Indirect costs are allocated as follows: salaries on the basis of sales; insurance and depreciation on the basis of square footage; and office expenses on the basis of number of employees. Additional information about the departments follows. Department Square footage Number of employees A 30,100 72 B 12,900 48 Required: 1. Determine the departmental contribution to overhead and the departmental net income for department A and Department B. (Do not round intermediate calculations. Round your final answers to nearest whole dollar.)

2. Should Department B be eliminated?

  • Yes

  • No

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