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Marian Corporation Has Two Separate Divisions That Operate as Profit

question 89

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Marian Corporation has two separate divisions that operate as profit centers. The following information is available for the most recent year: 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 departmental income for the Black and Navy Divisions, respectively. A)  $52,000; $163,000. B)  $172,000; $352,000. C)  $72,000; $163,000. D)  $72,000; $193,000. E)  $100,000; $241,000. 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 departmental income for the Black and Navy Divisions, respectively.

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Definitions:

Equity Method

An accounting technique used by companies to record their investments in other companies, where the investment gives the investor significant influence over the investee, but not control or full ownership.

Additional Paid-in Capital

The excess amount over the par value that shareholders pay when shares are issued, recorded in the equity section of the balance sheet.

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