Question

Cruz Corporation owns manufacturing facilities in States A, B, and C. A uses a three-factor apportionment formula under which the sales, property and payroll factors are equally weighted. B uses a three-factor apportionment formula under which sales are double-weighted. C employs a single-factor apportionment factor, based solely on sales. Cruz’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 ​ Cruz’s apportionable income assigned to C is: Group of answer choices $1,000,000. $273,333. $200,000. $0.

Answer 1

$200,000

Step-by-step explanation:

We are given:

•Sales

State A sales:$400,000

State B sales:$800,000

State C sales:$300,000

Total sales : $1,500,000

•Payroll activity

State A payroll: 100,000

State B payroll: 150,000

State C payroll: 50,000

Total payroll: 300,000

• Avg property owned

State A : 200,000

State B : 200,000

State C : 200,000

Total: 200,000

Cruz's approtionable income is $1,000,000 and sales generated by state C is $300,000 and we are told that State C employs a single-factor apportionment factor, based solely on sales

To find the approtionable income assigned to state C, we have:

State C sales/ total sales

= 300,000/1,500,000

= 0.20

= 20℅

Therefore, the approtionable income assigned to state C, will be:

$1,000,000 * 20℅

= 200,000