Question

Jansen Company reports the following for its ski department for the year 2019. All of its costs are direct, except as noted. Sales Cost of goods sold Salaries Utilities Depreciation Office expenses $630,000 425,000 115,000 ($25,800 is indirect) 16,000 ($5,500 is indirect) 44,200 ($17,200 is indirect) 23,800 (all indirect) 1. Prepare a departmental income statement for 2019. 2. & 3. Prepare a departmental contribution to overhead report for 2019. Based on these two performance reports, should Jansen eliminate the ski department? Complete this question by entering your answers in the tabs below.

Answer 1

Solution:

1)

Jansen company SKi department Department income statment for the year 2017
	$	$
Sales		630,000
Cost of Goods sold		425,000
Gross profit		205,000
Operating expenses
Salaries	115,000
Utilities	16,000
Depreciation	44,200
Office expenses	23,800	199,000
Operating income		$6,000

2&3)

Jansen company Ski department contributin margin income statement for the year 2017
	$	$
Sales		630,000
variable expenses
Cost of goods sold	425,000
Salaries	89,200
Utilities	10,500
Depreciation	27,000	551,700
Contribution to Overhead		$78,300

No,Jansen should not eliminate the SKi Department