Answer: Black Division $215,000
Navy Division $120,000
Explanation:
The other expenses are straightforward except for the Rent Expense so I'll tackle that first.
The Black Division occupies 22,000 square feet in the plant. The Navy Division occupies 33,000 square feet. Rent is an indirect expense and is allocated based on square footage.
Total square feet is,
= 22,000 + 33,000
= 55,000 square feet.
Black Division's percentage of the rent will be,
= 22,000/55,000
= 0.4
Navi Division's percentage of the rent will be
= 33,000/55,000
= 0.6
Total rent is $55,000.
Black Division is therefore apportioned,
= 0.4 * $55,000
= $22,000
Navy is apportioned,
= 0.6 * $55,000
= $33,000
Black Division Departmental Income is therefore,
= Sales - Cost of Goods sold - Salary - Rent
= 400,000 - 140,000 - 23,000 - 22,000
= $215,000
Black Division's Departmental Income is $215,000
Navy Division's Departmental Income is,
= Sales - Cost of Goods sold - Salary - Rent
= 350,000 - 154,000 - 43,000 - 33,000
= $120,000
Navy Division's Departmental Income is $120,000
