Answer:
The correct option is c. $482,000; $87,000
Explanation:
For computing the departmental income, the following formula is shown below:
= Sales - cost of good sold - salary expense - rent expense
For Black division,
The department income would be
= Sales - cost of good sold - salary expense - rent expense
where,
rent expense = black division × (total rent expense ÷ sum of total square feet)
where,
sum of total square feet = black division square feet + navy division square feet
= 28,000 + 42,000
= 70,000 square feet
So, the rent expense for black division would be equal to
= 28,000 × (70,000 ÷ 70,000)
= 28,000
So, the departmental income for black division equal to
= $700,000 - 170,000 - 20,000 - 28,000
= $482,000
For Navy division,
The department income would be
= Sales - cost of good sold - salary expense - rent expense
where,
rent expense = navy division × (total rent expense ÷ sum of total square feet)
where,
sum of total square feet = navy division square feet + navy division square feet
= 28,000 + 42,000
= 70,000 square feet
So, the rent expense for black division would be equal to
= 42,000 × (70,000 ÷ 70,000)
= 42,000
So, the departmental income for black division equal to
= $320,000 - 151,000 - 40,000 - 42,000
= $87,000
Hence, the departmental income for the Black and Navy Divisions is $482,000 and $87,000 respectively.
Therefore, the correct option is c. $482,000; $87,000
