Problem 22-3B Departmental income statements P3 Bonanza has two operating departments (Movies and Video Games) and one service department (Office). Its departmental income statements follow. Indirect expenses and service department expenses consist of rent, utilities, and office department expenses. For Year Ended December 31 Sales Cost of goods sold Gross profit Expenses Departmental Income Statements Sales salaries Supplies used Depreciation Equipment Rent Utilities Share of office department expenses Total expenses Income (loss) Movies $600,000 420,000 180,000 49,500 4,000 4,500 41,000 7,380 56,250 162,630 $17,370 Required 1. Prepare a departmental contribution to overhead report (see Exhibit 22.12). 2. Should the video games department be eliminated? Explain. Video Games $200,000 154,000 46,000 21,000 1,000 3,000 9,000 1,620 18,750 54,370 $ (8,370) Combined $800,000 574,000 226,000 70,500 5,000 7,500 50,000 9,000 75,000 217,000 $9,000
Problem 22-3B Departmental income statements P3 Bonanza has two operating departments (Movies and Video Games) and one service department (Office). Its departmental income statements follow. Indirect expenses and service department expenses consist of rent, utilities, and office department expenses. For Year Ended December 31 Sales Cost of goods sold Gross profit Expenses Departmental Income Statements Sales salaries Supplies used Depreciation Equipment Rent Utilities Share of office department expenses Total expenses Income (loss) Movies $600,000 420,000 180,000 49,500 4,000 4,500 41,000 7,380 56,250 162,630 $17,370 Required 1. Prepare a departmental contribution to overhead report (see Exhibit 22.12). 2. Should the video games department be eliminated? Explain. Video Games $200,000 154,000 46,000 21,000 1,000 3,000 9,000 1,620 18,750 54,370 $ (8,370) Combined $800,000 574,000 226,000 70,500 5,000 7,500 50,000 9,000 75,000 217,000 $9,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question

Transcribed Image Text:Problem 22-3B Departmental income statements P3
Bonanza has two operating departments (Movies and Video Games) and one service department (Office). Its departmental income
statements follow. Indirect expenses and service department expenses consist of rent, utilities, and office department expenses.
For Year Ended December 31
Sales
Cost of goods sold
Gross profit
Expenses
Departmental Income Statements
Sales salaries
Supplies used
Depreciation Equipment
Rent
Utilities
Share of office department expenses
Total expenses
Income (loss)
Movies
$600,000
420,000
180,000
49,500
4,000
4,500
41,000
7,380
56,250
162,630
$ 17,370
Required
1. Prepare a departmental contribution to overhead report (see Exhibit 22.12).
2. Should the video games department be eliminated? Explain.
Video Games
$200,000
154,000
46,000
21,000
1,000
3,000
9,000
1,620
18,750
54,370
$(8,370)
Combined
$800,000
574,000
226,000
70,500
5,000
7,500
50,000
9,000
75,000
217,000
$9,000
Expert Solution

This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps with 2 images

Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you


Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,

Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,


Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,

Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON

Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education

Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education