Question

Simpkin Corporation owns manufacturing facilities in States A, B, and C. B uses a three- factor apportionment formula under which sales are double-weighted Simpkin's operations generated $1,000,000 of apportionable income, and its sales and payroll activity and average property owned in each of the three states is as follows.

State A State B State C Totals
Sales $400,000 $800,000 $300,000 $1,500,000
Payroll 100,000 150,000 50,000 300,000
Property 200,000 200,000 200,000 600,000
Simpkin's apportionable income assigned to B is:________.
a. $1,000,000
b. $533,333
c. $475,000
d. $0.

Answer 1

Simpkin Corporation

Simpkin's apportionable income assigned to B is:________.

b. $533,333

Step-by-step explanation:

a) Data and Calculations:

Apportionable operating income = $1,000,000

State A State B State C Totals

Sales $400,000 $800,000 $300,000 $1,500,000

Payroll 100,000 150,000 50,000 300,000

Property 200,000 200,000 200,000 600,000

State B's portion of the operating income = $1,000,000 * $800,000/$1,500

= $533,333