Vaughn CoOperates Three Separate Departments (A, B, C) Required: Prepare an Income Statement Showing the Departmental Contributions to Are

question 122

Essay

Vaughn Co.operates three separate departments (A, B, C).The data below are provided for the current year:
$$\begin{array} { l r l } \text { Total sales } & \$ 120,000 & ( \$ 40,000 \text { from each department) } \\\text { Cost of goods sold } & 80,000 & ( 50 \% \text { from } A ; 25 \% \text { from } B ; 25 \% \text { from } C ) \\\text { Direct expense } & 26,000 & \$ \$ 6,000 \text { from } A ; \$ 12,000 \text { from } B ; \$ 8,000 \\& & \text { from } C ) \\\text { Indirect expenses } & 9,000 &\end{array}$$ Required: Prepare an income statement showing the departmental contributions to overhead for the current year.

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Definitions:

Economic Rents

Earnings that exceed the minimum amount necessary to keep a factor of production in its current use.

Aggregate Production

The total output of goods and services produced by an economy over a specific time period.

Reallocation

denotes the process of distributing or assigning resources, roles, or tasks differently in response to changes in conditions, preferences, or objectives.

Demand for Land

The demand for land refers to the desire, backed by purchasing power, for the use of land resources for residential, commercial, or agricultural purposes.