Jamesway Corporation Has Two Separate Divisions That Operate as Profit

question 46

Multiple Choice

Jamesway Corporation has two separate divisions that operate as profit centers.The following information is available for the most recent year:
$$\begin{array} { l r r r } & \text { White Division } & & \text { Grey Division } \\\text { sales (net) } & \$ 200,000 & & \$ 400,000 \\\text { salary expense } & 28,000 & & 48,000 \\\text { Cost of goods sold ...... } & 100,000 & & 159,000\end{array}$$ The White Division occupies 20,000 square feet in the plant.The Grey 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 White and Grey 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 Costs

Compensation and perks given to workers directly engaged in creating products or services.

Fixed Overhead

Regular, unchanged costs associated with operating a business, such as rent and salaries, irrespective of production levels.

Work in Process

Goods that are in various stages of completion in the manufacturing process but are not yet finished products.

Direct Labor Variances

The differences between the actual labor costs incurred and the standard labor costs for the actual production achieved.