Question

Marian Corporation has two separate divisions that operate as profit centers. The following information is available for the most recent year: Black Division Navy Division Sales (net) $ 200,000 $ 400,000 Salary expense 28,000 48,000 Cost of goods sold 100,000 159,000 The Black Division occupies 20,000 square feet in the plant. The Navy Division occupies 30,000 square feet. Rent is an indirect expense and is allocated based on square footage. Rent expense for the year was $50,000. Compute gross profit for the Black and Navy Divisions, respectively.

Answer 1

$100,000 and $241,000

Step-by-step explanation:

The computation of the gross profit for the Black and Navy Divisions shown below:

As we know that

Gross profit = Sales - cost of goods sold

For Black, it would be

= $200,000 - $100,000

= $100,000

And, for Navy, it is

= $400,000 - $159,000

= $241,000

We simply applied the above formula to compute the gross profit