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Requirement-1
To Prepare:
Departmental Income Statement
Requirement-1
![Check Mark](/static/check-mark.png)
Answer to Problem 8E
Departmental Income Statement is as follows:
Jansen Company | |
Ski Department | |
Income Statement | |
For the year ended Dec. 31, 2019 | |
Sales | $ 605,000 |
Less: Expenses | |
Cost of Goods Sold | $(425,000) |
Salaries | $(112,000) |
Utilities | $ (14,000) |
$ (42,000) | |
Office Expenses | $ (20,000) |
Net Income (Loss) | $ (8,000) |
Explanation of Solution
Departmental Income Statement is prepared as follows;
Jansen Company | |
Ski Department | |
Income Statement | |
For the year ended Dec. 31, 2019 | |
Sales | $ 605,000 |
Less: Expenses | |
Cost of Goods Sold | $(425,000) |
Salaries | $(112,000) |
Utilities | $ (14,000) |
Depreciation | $ (42,000) |
Office Expenses | $ (20,000) |
Net Income (Loss) | $ (8,000) |
Concept Introduction:
Contribution Margin Income Statement:
Contribution Margin Income Statement is a format of income statement used for cost volume profit analysis. This statement shows the Variable costs and fixed costs as separate items. It calculates the contribution margin and Net income as well.
Requirement-2
To Prepare:
The departmental contribution margin income statement
Requirement-2
![Check Mark](/static/check-mark.png)
Answer to Problem 8E
The departmental contribution margin income statement is as follows:
Jansen Company | |
Ski Department | |
Contribution Income Statement | |
For the year ended Dec. 31, 2019 | |
Sales | $ 605,000 |
Less: Direct Expenses: | |
Cost of Goods Sold | $(425,000) |
Salaries | $ (97,000) |
Utilities | $ (11,000) |
Depreciation | $ (32,000) |
Contribution | $ 40,000 |
Less: Indirect Expenses: | |
Salaries | $ (15,000) |
Utilities | $ (3,000) |
Depreciation | $ (10,000) |
Office Expenses | $ (20,000) |
Net Income (Loss) | $ (8,000) |
Explanation of Solution
The departmental contribution margin income statement is prepared as follows:
Jansen Company | |
Ski Department | |
Contribution Income Statement | |
For the year ended Dec. 31, 2019 | |
Sales | $ 605,000 |
Less: Direct Expenses: | |
Cost of Goods Sold | $(425,000) |
Salaries (112000-15000) | $ (97,000) |
Utilities (14000-3000) | $ (11,000) |
Depreciation (42000-10000) | $ (32,000) |
Contribution | $ 40,000 |
Less: Indirect Expenses: | |
Salaries | $ (15,000) |
Utilities | $ (3,000) |
Depreciation | $ (10,000) |
Office Expenses | $ (20,000) |
Net Income (Loss) | $ (8,000) |
Concept Introduction:
Contribution Margin Income Statement:
Contribution Margin Income Statement is a format of income statement used for cost volume profit analysis. This statement shows the Variable costs and fixed costs as separate items. It calculates the contribution margin and Net income as well.
Requirement-3
If the department should be eliminated or not
![Check Mark](/static/check-mark.png)
Answer to Problem 8E
The department should not be eliminated
Explanation of Solution
Jansen Company | |
Ski Department | |
Contribution Income Statement | |
For the year ended Dec. 31, 2019 | |
Sales | $ 605,000 |
Less: Direct Expenses: | |
Cost of Goods Sold | $(425,000) |
Salaries (112000-15000) | $ (97,000) |
Utilities (14000-3000) | $ (11,000) |
Depreciation (42000-10000) | $ (32,000) |
Contribution | $ 40,000 |
Less: Indirect Expenses: | |
Salaries | $ (15,000) |
Utilities | $ (3,000) |
Depreciation | $ (10,000) |
Office Expenses | $ (20,000) |
Net Income (Loss) | $ (8,000) |
The ski department has positive contribution for the indirect expenses, hence it should not be eliminated.
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Chapter 24 Solutions
Connect Access Card For Fundamental Accounting Principles
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