Marian Corporation Has Two Separate Divisions That Operate as Profit

question 78

Multiple Choice

Marian Corporation has two separate divisions that operate as profit centers. The following information is available for the most recent year: $$\begin{array} { l r r } & \text { Black Division } & \text { Navy Division } \\\text { Sales (net) } & \$ 200,000 & \$ 400,000 \\\text { Salary expents } & 28,000 & 48,000 \\\text { Cost af goods sold } & 100,000 & 159,000\end{array}$$ 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) $100,000; $241,000.
• B) $72,000; $163,000.
• C) $72,000; $193,000.
• D) $52,000; $163,000.
• E) $172,000; $352,000.

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Definitions:

PSA Handbook

Stands for the Public Sector Accounting Handbook, which contains the accounting standards and guidelines for public sector entities in Canada.

Financial Reporting

The process of producing statements that disclose an organization's financial status to management, investors, and the regulatory authorities.

Government Business Enterprises

Public-sector entities that are legally separate from the government but operate in a commercial environment to deliver goods and services not typically provided by private sector businesses.

Amortization Of Tangible Capital Assets

The systematic reduction in the value of physical assets of a company over their useful lives for accounting and tax purposes.