Nesbit Co Has Two Operating (Production) Departments Supported by a Number

question 191

Essay

Nesbit Co. has two operating (production) departments supported by a number of service departments. The following information was collected for a recent period:
Indirect costs are allocated as follows: salaries on the basis of sales, office expenses on the basis of the number of employees, and all other costs on the basis of square footage. Additional information about the production departments follows:
Square Number of
Footage Employees
Machining 14,535 78
Assembly 4,845 52
Sales for the Machining Department are $724,404 and sales for the Assembly Department are $356,796. Determine the departmental contribution to overhead and the departmental net income for each production department.

---

Definitions:

Future Values

The worth of a property or money at a future specified date that equals a certain amount at present.

Annuities

Investment instruments offering periodic disbursements, frequently employed for accumulating retirement funds.

Future Values

The value of an asset or cash at a specific date in the future that is equivalent in value to a specified sum today.

Annuities

Financial products that provide a series of payments over time, often used for retirement savings.