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Question
Renton Co. has two operating (production) departments supported by a number of service departments. The following information was collected for a recent period:
| Direct Costs | Indirect Cost | ||
| Machining Department | Assembly Department | ||
| Salaries................................ | $122,400 | $ 85,700 | $36,700 |
| Insurance................................ | 20,200 | 11,000 | 5,500 |
| Utilities................................ | 23,900 | 13,900 | 2,000 |
| Depreciation................................ | 20,700 | 11,500 | 13,800 |
| Maintenance................................ | 7,000 | 4,700 | 29,400 |
| Office expenses................................ | -0- | -0- | 71,100 |
| Cost of goods sold................................ | 327,600 | 121,200 | |
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:
Square Number of
Footage Employees
Machining.. 14,535 ......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................... ......................................................... 78
Assembly... 4,845 52
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.
Answer
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