Marian Corporation Has Two Separate Divisions That Operate as Profit

question 72

Multiple Choice

Marian Corporation has two separate divisions that operate as profit centers.The following information is available for the most recent year: 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.

• A)$72,000;$193,000.
• B)$172,000;$352,000.
• C)$100,000;$241,000.
• D)$52,000;$163,000.
• E)$72,000;$163,000.

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Definitions:

Direct Labor Cost

The expense related to the work of employees directly involved in the production of goods or services, such as wages for assembly line workers.

Direct Labor-Hours

Direct labor-hours are the total number of hours worked by employees directly involved in the manufacturing process, used as a basis for assigning labor costs to products.

Direct Materials

Raw materials that can be directly identified with the production of specific goods or services and are a major component of product costs.

Budgeted Production

The planned level of production output, calculated based on demand forecasts and inventory requirements.