Question

The Black Division occupies 16,000 square feet in the plant. The Navy Division occupies 26,000 square feet. Rent is an indirect expense and is allocated based on square footage. Rent expense for the year was $46,000. Compute gross profit for the Black and Navy Divisions, respectively.

Answer 1

Black $492,476

Navy $100,524

Step-by-step explanation:

The above question is incomplete. However, other information required are added.

Navy division Black division

Sales net

$320,000 $700,000

Salary expenses

40,000 $20,000

Cost of goods sold

$151,000. $170,000

Rental expense for Black division

= 16,000 / (16,000 + 26,000) × 46,000

= 17,524

Navy division

= 26,000 / (16,000 + 26,000) × 46,000

= 28,476

Therefore,

Income for Black division

= 700,000 - 20,000 - 170,000 - 17,524

= $492,476

Income for Navy division

= 320,000 - 40,000 - 151,000 - 28,476

= $100,524