Answer:
White Division Gross Profit = $72,200
Grey Division Gross Profit = $247,700
Explanation:
White Division Grey division
Sales (net) $270,000 $540,000
Less: Cost of goods sold <u> $135,000 </u> <u>$202,500</u>
Gross Margin $135,000 $337,500
Less: Salary Expenses $37,800 $64,800
Rent <u>$25,000</u> <u>$25,000</u>
Gross Profit <u> $72,200 </u> <u>$247,700</u>
The White Division occupies 25,000 square feet in the plant. The Grey Division occupies 25,000 square feet. Hence, the rent expenses will be shared equally. Rent = $50,000 hence, both division will pay $25,000 each for rent