Question

Check my worl Exercise 22-8 Departmental income statement and contribution to overhead LO P3 10 points Jansen Company reports the following for its ski department for the year 2019. All of its costs are direct, except as noted. eBook Print Sales Cost of goods sold Salaries Utilities Depreciation office expenses $610,000 445,000 115,000 ($25,600 is indirect) 17,800 ($5,900 is indirect) 50,000 ($17,500 is indirect) 29,200 (all indirect) References 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

1 x fc 1 JANSEN COMPANY Departmental Income Statement-Ski Department for the year ended December 31, 2019 sales $ 610,000 cost of goods sold $ 445,000 gross profit $ 165,000 operating expenses salaries $ 115,000 utilties $ 17,800 depreciation $ 50,000 office supplies $ 29,200 total operating expenses $ 212,000 net operating income -$ 47,000 JANSEN COMPANY Departmental Contribution to Overhead-Ski Department for the year ended December 31, 2019 sales $ 610,000 cost of goods sold $ 445,000 gross profit $ 165,000 variable expenses salaries $ 89,400 utilties $ 11,900 depreciation $ 32,500 total operating expenses $ 133,800 net operating income $ 31,200

B29 1 x fc 3 AB | 3 Ishould Jansen eliminate the ski department? NO reason - because the Ski Department's Contribution to Overhead is $31,200 i.e. positive. The net operating loss is due to the allocated indirect costs which shall continue to incur even if Ski Department is eliminated.

for formulas and calculations, refer to the image below -

x fx 1 JANSEN COMPANY Departmental Income Statement-Ski Department for the year ended December 31, 2019 sales 610000 cost of goods sold 445000 gross profit =D5-D6 operating expenses salaries 115000 utilties 17800 depreciation 50000 office supplies 29200 total operating expenses =SUM(09:012) net operating income =D7-D13 JANSEN COMPANY Departmental Contribution to Overhead-Ski Department for the year ended December 31, 2019 sales 610000 cost of goods sold 445000 gross profit =D19-D20 variable expenses salaries =115000-25600 utilties =17800-5900 depreciation =50000-17500 total operating expenses =SUM(D23:D25) net operating income =D21-D26

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